• 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 ...Show more

Summary

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
Save Your Time for More Important Things
Let us write or edit the case study on your topic
"Rewriting Pension History. Some big firms move to recognize Gain or loss in the year they occur"
with a personal 20% discount.
Grab the best paper

Related Essays

Big Data Executive Briefs
The existence of open economies which provides limitless business opportunities to organizations all over the world has played a major role in the process of increasing the level of competition in the markets all over the world. This has in return resulted in the process of a generation of a large number of alternatives to the buyers and consumers in the open market, who essentially pick up the items that best suits their interest and budget expenses.
13 pages (3250 words) Assignment
Diversification of Firms
The business industry is among the growing industries in the world. Several investors are attracted to different business across the globe. This has resulted into increased competition among the players in the local and international markets. The other difficulty comes from the dynamic nature of the market forces and the technological advances that are currently registered.
8 pages (2000 words) Essay
Product of Gain
Though these factors and forces may vary depending on the specific company and industrial group, they can generally be divided into broad micro environmental and macro environmental components. Trade has significantly improved due to many factors that have greatly advanced the marketing options.
3 pages (750 words) Admission/Application Essay
Three-year marketing plan
The proposed product in this marketing plan is a small appliance electronic Ice-cream maker with quality assurance and at a cheaper price. In relation to its mission statement, Company G attempts to provide its customers with a high-quality product, i.e. t6he ice-cream maker, as per the targeted customers’ conveniences, facilitating innovative electronic equipments in the present competitive market scenario.
6 pages (1500 words) Essay
Big issue magazine
The main reason why homeless people sell the “big issue” magazine is because the company aims at offering employments for this individuals so that they can earn and reduce poverty (Oxfam, 2004). The price of these magazines the street vendors buy the magazine for one GBP from the big issue Ltd and sell it at an approximated price of 2GBP to the street customers.
4 pages (1000 words) Essay
Pension Fund SWOT Analysis & Strategy
Introduction More than thousands of years the word culture is conceptualized by philosophers, historians, sociologists and anthropologists. In addition, a set of beliefs, values, norms and thinking for behavior of all members of society and their common understandings of each other is called culture.
8 pages (2000 words) Essay
Gain Laundry Detergent
It is also used to describe how consumers with similar product or service needs are divided into groups to enable service providers charge them differently. True
3 pages (750 words) Assignment
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT