Chapter 7: Pension Accounting—Defined Benefit Basics

In this section

• Defined Benefit vs. Defined Contribution Plans
  Explore key differences in risk, funding, and financial reporting between Defined Benefit and Defined Contribution pension plans at the CFA Level II depth.
• Pension Obligations and Service Costs
  Explore the key measurements of pension obligations (ABO, PBO) and delve into crucial components of pension expense, including service cost, interest, and actuarial assumptions under IFRS and US GAAP.
• IFRS vs. US GAAP: Pension Liability Reporting
  Explore the key differences between IFRS and US GAAP pension liability reporting methods, covering net interest vs. expected return, remeasurement vs. amortization, and the impact on earnings and comparability.
• Practice Vignette: Determining Funded Status
  Explore a hands-on pension accounting scenario focused on funded status calculations, net pension asset/liability classification, and IFRS vs. US GAAP differences. This practical vignette helps you grasp core concepts and exam-ready techniques for analyzing defined benefit plans.