Chapter 16 - Accounting for compensation. After completing this chapter you should be able to: Explain the accounting for salary and bonuses, describe the accounting for stock compensation plans under generally accepted accounting principles, discuss the controversy surrounding stock compensation plans,. | CHAPTER 16 ACCOUNTING FOR COMPENSATION INTERMEDIATE ACCOUNTING Principles and Analysis 2nd Edition Warfield Weygandt Kieso Explain the accounting for salary and bonuses. Describe the accounting for stock compensation plans under generally accepted accounting principles. Discuss the controversy surrounding stock compensation plans. Identify types of pension plans and their characteristics. List the components of pension expense. Utilize a worksheet for employer’s pension plan entries. Explain the accounting for prior service cost and gains and losses. Describe the reporting requirements for pension plans in financial statements. Learning Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a company’s know-how, market dominance, marketing setup, well-trained employees, and brand image). Timeliness (no real time financial information) Salary and Bonuses Stock Compensation Plans Postretirement Benefits Payroll deductions Compensated absences Bonuses Major reporting issue Accounting for stock compensation Stock purchase plans Disclosure of compensation plans Debate over stock option accounting Defined-contribution Defined-benefit Components of pension expense Using a pension worksheet Reporting pension amounts Other postretirement expenses Accounting for Compensation Service Cost - Actuaries compute service cost as the present value of the new benefits earned by employees during the year. Future salary levels considered in calculation. Interest on Liability - Interest accrues each year on the PBO just as it does on any discounted debt. Actual Return on Plan Assets - Increase in pension funds from interest, dividends, and realized and unrealized changes in the fair market value of | CHAPTER 16 ACCOUNTING FOR COMPENSATION INTERMEDIATE ACCOUNTING Principles and Analysis 2nd Edition Warfield Weygandt Kieso Explain the accounting for salary and bonuses. Describe the accounting for stock compensation plans under generally accepted accounting principles. Discuss the controversy surrounding stock compensation plans. Identify types of pension plans and their characteristics. List the components of pension expense. Utilize a worksheet for employer’s pension plan entries. Explain the accounting for prior service cost and gains and losses. Describe the reporting requirements for pension plans in financial statements. Learning Objectives 1. On the topic, “Challenges Facing Financial Accounting,” what did the AICPA Special Committee on Financial Reporting suggest should be included in future financial statements? Non-financial Measurements (customer satisfaction indexes, backlog information, and reject rates on goods purchases). Forward-looking Information Soft Assets (a .
