Answered: What is the definition of “actuarial…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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What is the definition of “actuarial present value”?

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Accumulated Benefit Obligation: It is an inexact rate of a company's pension plan liability towards the employee. The accumulated benefit obligationis an estimated value of future pension plan liability based on the assumption that the pension plan is ended with immediate effect and, it does not consider any increase in the value of future salary.

Post-retirement benefit plan: A fixed sum of money, receivable in future or after the age of retirement, which the beneficiary has invested during the period of employment, is termed as post-retirement benefit plan. This pension is mostly offered to government, public sector and some private sector employees.

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