[MustPass1988]

I used CPA Exam for Free to supplement for the pension section as there were not many in Wiley’s testbank. I noticed that in order to calculate the PBO, the expected return on plan assets was always subtracted rather than the actual return. This is in conflict with Roger’s material & the Wiley testbank, which says that the actual return should be deducted. I don’t care which one it is, I just need to know for the test! Does anyone have an idea of what it should be?

AUD: PASSED [81]; Expired, retaking August 23rd
BEC: PASSED [83]; Expired, retaking July 11th
REG: PASSED [83]
FAR: FAILED [64]; Retaking May 23rd

[Anonymous]

company's can use actual or expected return

they can use expected to smooth earnings

and then the difference between actual and expected can be recognized in income statement this year

or goes to OCI with the gains and losses and amortized using the corridor approach

hope that helps

[MustPass1988]

Well, I just need to know what to use for the calculation 🙂 I understand that they can use either but Wiley is saying to always use actual & CPA for Free is saying to always use expected.

AUD: PASSED [81]; Expired, retaking August 23rd
BEC: PASSED [83]; Expired, retaking July 11th
REG: PASSED [83]
FAR: FAILED [64]; Retaking May 23rd

[Anonymous]

even if they gave you actual return use the expected return

in the fact that if they gave you the expected return then the company uses the expected approach

it does not make a lot of sense but i have seen that in all questions related to that issue

[iampei]

Like what anasag said, If they give you both actual and expected, use the expected.

[Anonymous]

In the five elements of pension expense, 2 of them are the ACTUAL Return and unrecognized gains and losses

These means that you use the ACTUAL return to calculate the expense, but you also have to add the gain or loss that result from the difference from the Actual and the Expected…

Example:

Actual Return on plan assets: 52,000

Expected Return on plan asset: 47,000

Journal Entries would be

DB Plan Assets 52,000

CR Pension Expense 52,000

DB Pension Expense 5,000

CR Unexpected Gain 5,000

The gain result because you got 5,000 more of what you expected

The net total charged to the expense would be the 47,000 that was expected

So if they ask you what is the Pension Expense, you can use the expected return because it will be the same.. but if they ask you for what is the debit to plan assets or how mush would be charged to other comprehensive income, then you should use the 2 entries above.

[MustPass1988]

Ok that makes sense- I am annoyed with the Wiley Testbank because it is pretty specific that the actual return should be used & the only reason I even started questioning it was because of Cpa review for free. Thanks everyone!

AUD: PASSED [81]; Expired, retaking August 23rd
BEC: PASSED [83]; Expired, retaking July 11th
REG: PASSED [83]
FAR: FAILED [64]; Retaking May 23rd

[jpat1980]

I use both Wiley and Becker… I only use the Wiley AFTER I have gone through the Becker… Wiley digs a bit deeper on the subject and makes you think harder.. The actual CPA exam is closer to the Becker, IMO… The CPA exam is direct and to the point… Wiley gives you complex problems and in the end may confuse you more than it helps you..but once again, its good to see problems from different angles

AUD-68,74,88
REG-81
BEC-75
FAR-71,79
(Primary: Becker | Supplemental: Wiley MCQ's, Ninja Notes)

CFP - passed(3/2013)
(KIER, College for Financial Planning-cffp.edu, Jeff Rattiner Books and Notes)

[jeff]

Wiley's questions are from the AICPA, fyi.

If you move from medium to hard testlets, you will see those complicated questions.

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Author]

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