• Home
  • Subjects
  • Marketing
  • Rewriting Pension History. Some big firms move to recognize Gain or loss in the year they occur

Rewriting Pension History. Some big firms move to recognize Gain or loss in the year they occur - Case Study Example

Only on StudentShare

Extract of sample
Rewriting Pension History. Some big firms move to recognize Gain or loss in the year they occur

Instead, these companies would now take into account such gain as well as losses in the corresponding year of their incurrence. The mentioned companies did so, in order to make their income look superior in the upcoming years. The companies claim that the change would make their income reporting additionally transparent and that the prevalent low rate of interest made this a suitable point in time for the change in practice. The change in the practice is on the face of the criticisms for the fact that the present accounting rule can have a considerable impact on the income of the companies for years.
The current accounting system concerning the pension assets are very ambiguous and do not provide any information to an investor about the gains or losses in the pension assets in a particular year. The actual gain or loss of a particular year is significantly affected due to the distribution of the previous years’ gain or loss values over a period of time. This practice propagated by Financial Accounting Standards Board does not comply with the matching principle either. For instance, Honeywell, AT&T and Verizon had huge values of unrecognized losses as on 2009, viz. 55%, 49% and 43% of the pension assets respectively. The non-recognition of these losses on the income statement of 2009 would have an impact on the actual earnings of the companies in the coming years. Though these companies consider the latest mark-to-market strategy to be preferable due to its simplicity, the anticipated rise in the interest rates could also help their pension plans. The high rate of interests would lower the value of the companies’ future pension obligations due to the discounting effect. The reduced pension obligation would result in lowered interest expense to be paid by the companies and hence enhance the performance of the pension assets and lead to superior earnings.
However, this change involves potential risk for the shareholders of the ...
Download paper


A few of the large companies are simplifying their accounting system of their pension plans, shifting from the existing accounting procedure of spreading the outlay of huge pension gains as well as the losses into incomes over a period of time to the system of recognizing the…
Author : eleonorestreich

Related Essays

Big Data Executive Briefs
However, it can be said that the lifeline of business organizations all over the world is to cater to demand of the consumers and customers, and hence the customers become the life line of the organizations and businesses. With the increase in competition in the market place, the companies are finding it tough to gain competitive advantage over their rivals, who are targeting the same group of consumers with similar product offerings. The application of Big Data technology helps the companies in a major way in the process of accumulating and analyzing large amounts of data in real time...
13 pages (3263 words) Assignment
Diversification of Firms
The needs of the customers constantly changes and the firms are often challenged to keep pace with the changes. In order to reduce these risks, a firm needs to diversify its portfolio of stocks (Solnik, 1995, p.89). In the current market, firms should not only focus on how to produce their goods and services and avail them to the clients in the market. Rather, the market dynamics require the firms to develop corporate strategies and respond to these market forces will providing balance to the objectives and goals of the firm (Thinking Made Easier, 2011). In response to the changing market...
8 pages (2008 words) Essay
Product of Gain
One of the most noticeable is the discovery technological enhancements in almost all trade aspects. Gains acquired in different marketing businesses can be attributed to improvement in transport and communication (Lucas, 2000). The enhancements in these two fields have ensured that business is more practical and easy to crack through. The involvement of consumers in any type of business can be of great importance to an increase in the business profits. It is important to understand that as technology advances there is increased competition, and the only reasonable way to acquire gains in the...
3 pages (753 words) Admission/Application Essay
three-year marketing plan
2. Classify Company G’s products using the three-way consumer product classification system. Small appliances, such as ice-cream makers are now-a-days becoming tremendously popular. Applying the three-way consumer product classification system, Company G’s products can be categorized as convenience goods by a large extent. Notably, the classification system divides commodities into three categories, i.e. convenience goods, shopping goods and specialty goods, among which, the offered product as Company G’s ice-cream maker satisfies the characteristics of convenience goods. However, a few...
6 pages (1506 words) Essay
Big issue magazine
The organization behind the “big issue” magazine is divided into two parts, where there is the part that produces and sells the magazine to the street vendor network. The other part is a nonprofit foundation that helps the street vendors regains control of their lives (Oxfam, 2004). The magazines have transformed lives of many vendors who are in a position to feed and support their families. However, the sales of the magazines have subsided currently, due to the recession, which has affected advertising and general sales. Prior to recession, national and international donor funding are...
4 pages (1004 words) Essay
Pension Fund SWOT Analysis & Strategy
However, cannot be defined accurately but it can be felt and sensed. Likewise, an organization has its own culture, rules and regulations to follow. Organizations are like societies; therefore, they have their own parameters. If the rules, regulations and parameters are followed strictly and the productivity outcome is excellent, the organization has strong organizational culture. Otherwise, the organizational culture is weak, it is not implemented strongly, or there are weaknesses in set parameters. Significant benefits are obtainable through strong organizational culture. Nonetheless, it is...
8 pages (2008 words) Essay
Gain Laundry Detergent
A true market segment has the same response to market stimulus and is reachable by market intervention.
3 pages (753 words) Assignment
Got a tricky question? Receive an answer from students like you! Try us!