Pension expense : Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees. Pension expense includes the following components: Service cost Interest cost Expected return on plan assets Amortization of prior service cost Amortization of net loss or net gain International Financial Reporting Standards (IFRS) : IFRS are a set of international accounting standards which are framed, approved, and published by International Accounting Standards Board (IASB) for the preparation and disclosure of international financial reports. Generally Accepted Accounting Principles (GAAP) : These are the guidelines necessary to create accounting principles approved Financial Accounting Standards Board (FASB) for the implementation of financial information reporting in the Country U. To explain : Whether the change in discount rate from 7% to 6% would cause a loss under GAAP

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Chapter 17, Problem 17.18E

(1)

To determine

Pension expense: Pension expense is an expense to the employer paid as compensation after the completion of services performed by the employees.

Pension expense includes the following components:

Service cost

Interest cost

Expected return on plan assets

Amortization of prior service cost

Amortization of net loss or net gain

International Financial Reporting Standards (IFRS): IFRS are a set of international accounting standards which are framed, approved, and published by International Accounting Standards Board (IASB) for the preparation and disclosure of international financial reports.

Generally Accepted Accounting Principles (GAAP): These are the guidelines necessary to create accounting principles approved Financial Accounting Standards Board (FASB) for the implementation of financial information reporting in the Country U.

To explain: Whether the change in discount rate from 7% to 6% would cause a loss under GAAP

(2)

To determine

To journalize: Loss on PBO, under GAAP

(3)

To determine

To journalize: Loss on PBO, under IFRS

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