Jim Loris is the Food and Beverage analyst at Eastern Trust & Investments. Jeremy Paul is an intern under Loris’s supervision. Loris is planning on reviewing the financial statements of Atlantic Preserves, Inc., in the next few days. The company has recently signed a new collective agreement with its workers, and Loris is interested in seeing how the company’s employment costs have been affected. The company prepares its financial statements in accordance with US GAAP, and the new collective agreement became effective 1 January 2014.
Paul extracts portions of the new collective agreement related to the pension plan and mentions to Loris that there have been two changes related to the plan:
- The benefit formula has been changed to 1.75% × Final year’s salary × Number of years of service under the plan. Previously, the same formula was used, but with a factor of 1.65%.
- The vesting period has been changed from four years to three years.
Paul makes the following two comments about these changes to the pension plan:
- The new formula will have a big impact on income because the past service costs that arise will be expensed immediately.
- The change to a shorter vesting period will give rise to an actuarial gain.
我知道这个应该是lost，但是这个期间改变应该属于past service cost 吧，并不属于actuarial假设的变更
