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Accounting for defined-benefit pension plans involves complicated mathematical considerations. As a result, organizations enlist the help of actuaries, who are trained to assign probabilities to future events and quantify their financial effects.
Actuaries help ensure that sponsors have established appropriate funding levels to meet future obligations, and they assist in reporting on pension plans. Employers rely heavily on actuaries for assistance in developing, implementing, and administering pension plans. Continue Reading “The role of actuaries in pension accounting”
There are two basic types of pension plans: defined-contribution plans and defined-benefit plans. The plans differ in how benefits to retired employees (formal: pension recipients) are determined/calculated, and who bears the ultimate risk associated with the number of future benefits to be paid to retired employees.
Oil and natural gas properties, including related pipelines, are depreciated using a unit-of-production method. The cost of producing wells is amortized over proved developed reserves. License acquisition, common facilities and future decommissioning costs are amortized over total proved reserves. The unit-of-production rate for the depreciation of common facilities takes into account expenditures incurred to date, together with estimated future capital expenditure expected to be incurred relating to as yet undeveloped reserves expected to be processed through these common facilities.
whether the debt is issued in Euros or in US dollars. If the debt is issued in US dollars, then at the debt issuance date (1 July 200X) entity A will enter into a cross-currency swap in order to convert the US dollar exposure on the debt to a Euro exposure.
forward exchange rates are 1:1. The proceeds from the issuance of the debt are needed to finance the expansion of the company’s production facilities in Europe. The company is concerned that the EUR:USD exchange rate will fluctuate, such that additional USD debt will need to be issued in order to lock in the desired EUR 100 million in proceeds, which in turn will affect the interest incurred on the foreign currency debt to be issued.
receives a floating interest rate to hedge a highly probable forecast debt issuance. The date of issuance is known, but it is not known whether the debt will be at fixed– or floating– rates. Company A designates the swap as a cash flow hedge of the variability in cash flows of the debt to be issued, due to changes in interest rates. As a result, the company considers the following: