Pension Worksheet Example: 3 Years of Data | Intermediate Accounting | CPA Exam FAR | Chp 20 p 5

How do you complete a pension worksheet over three years for a defined benefit plan? In this intermediate accounting lecture, Professor Farhat works through a comprehensive three-year pension example, showing how to track the projected benefit obligation and plan assets, calculate pension expense, amortize prior service costs, and handle actuarial gains and losses. Essential FAR exam material for CPA candidates and accounting students. Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students. Video Timeline & Key Concepts: 0:00 — Year 1 (2016): underfunded plan, service cost, interest cost, and actuarial loss 5:04 — Year 2 (2017): plan amendment and amortizing prior service cost 11:13 — Year 3 (2018): change in actuarial assumptions and actuarial gain Frequently Asked Questions: What does a pension worksheet track? A pension worksheet tracks the projected benefit obligation, plan assets, pension expense, cash contributions, and the adjustments to other comprehensive income and the pension liability or asset. How are prior service costs handled? When a plan is amended, the prior service cost increases the obligation and is amortized over time, with the unamortized balance recorded in other comprehensive income. How are actuarial gains and losses treated? Actuarial gains and losses arise from changes in assumptions or differences between expected and actual results. They are recorded in other comprehensive income and amortized when they exceed a corridor threshold. What is the difference between service cost and interest cost? Service cost is the increase in the obligation from employee service in the current period, while interest cost is the growth in the obligation due to the passage of time using the discount rate. Is this tested on the CPA exam? Yes. Defined benefit pension accounting is heavily tested in the FAR section as part of intermediate accounting. #CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses #FAR #pension #definedbenefit #intermediateaccounting #ProfessorFarhat