Should Gpi Present an Asset for Prepaid Pension Costs in Its U.S. Financial Statements for Faithful Representation of This Situation?
GPI
I. Issue:
Should GPI present an asset for prepaid pension costs in its U.S. financial statements for faithful representation of this situation?
II. GAAP List:
715-10-15-6: For purposes of preparing financial statements in accordance with U.S. GAAP, to the extent that those arrangements are in substance similar to pension or other postretirement benefit plans in the United States, they are subject to the provisions of this Topic, includes no special provisions applicable.
715-30-55-65: Establish that there are no special provisions applicable to plans or arrangements outside the United States and specifies that, to the extent that those arrangements are in substance similar to plans in the United States.
715-30-25-1: If the fair value of plan assets exceeds the projected benefit obligation, the employer shall recognize in its statement of financial position an asset that equals the overfunded projected benefit obligation.
715-30-25-2: The employer shall aggregate the statuses of all overfunded plans and recognize that amount as an asset in its statement of financial position.
960-20-50-2: Present employees' accumulated contributions as of the benefit information date (including interest, if any) shall be disclosed.
960-20-35-1: An assumption of an ongoing plan shall underlie the other assumptions used in determining the actuarial present value of accumulated plan benefits.
III. Alternatives:
(A) Disclosure only. Do not present an asset for prepaid pension costs in its U.S. financial statements.
(B) Present an asset for prepaid pension costs on U.S. GAAP financial statements. Disclose the circumstances.
IV. Choice: (B)
V. Justification:
Asset: All three characteristics of an asset are not in dispute. There will be a future net cash inflow, and this inflow results from a past transaction and the company can obtain and control the future cash inflow. It is obviously, this pension contribution occurred in the past and the plan assets will
I. Issue:
Should GPI present an asset for prepaid pension costs in its U.S. financial statements for faithful representation of this situation?
II. GAAP List:
715-10-15-6: For purposes of preparing financial statements in accordance with U.S. GAAP, to the extent that those arrangements are in substance similar to pension or other postretirement benefit plans in the United States, they are subject to the provisions of this Topic, includes no special provisions applicable.
715-30-55-65: Establish that there are no special provisions applicable to plans or arrangements outside the United States and specifies that, to the extent that those arrangements are in substance similar to plans in the United States.
715-30-25-1: If the fair value of plan assets exceeds the projected benefit obligation, the employer shall recognize in its statement of financial position an asset that equals the overfunded projected benefit obligation.
715-30-25-2: The employer shall aggregate the statuses of all overfunded plans and recognize that amount as an asset in its statement of financial position.
960-20-50-2: Present employees' accumulated contributions as of the benefit information date (including interest, if any) shall be disclosed.
960-20-35-1: An assumption of an ongoing plan shall underlie the other assumptions used in determining the actuarial present value of accumulated plan benefits.
III. Alternatives:
(A) Disclosure only. Do not present an asset for prepaid pension costs in its U.S. financial statements.
(B) Present an asset for prepaid pension costs on U.S. GAAP financial statements. Disclose the circumstances.
IV. Choice: (B)
V. Justification:
Asset: All three characteristics of an asset are not in dispute. There will be a future net cash inflow, and this inflow results from a past transaction and the company can obtain and control the future cash inflow. It is obviously, this pension contribution occurred in the past and the plan assets will