Accounting for Postretirement Health Care and Life Insurance Benefits necessitates disclosures regarding an employer's accounting. These include a delineation of the provision of benefits and the groups of employees given coverage, a delineation of the employer's prevailing accounting and financing policies for such benefits and lastly the cost of such benefits acknowledged for the period. In particular, this is effective for the financial statements prepared by organizations for the financial period ending subsequent to December 15, 1984 with respect to postretirement health care and life insurance benefits that are provided not only in the United States but also international nations. Nonetheless, for financial periods prior to June 15, 1985 that lack data and information regarding benefits provided in foreign nations, it is not mandatory to include them (FASB, 2017).Moreover, the net pension liability or net pension assets have to be included in the financial statements as an asset or liability respectively. Any changes in this asset or liability that are yet to be included in the income reported have to be included in other comprehensive income. In the case of pensions, imperatively, the retirement benefits are a fixed amount in general with regard to the terms set for a contract, with the period or term not predetermined. In addition, it is more challenging and harder to make an estimation of the benefits of healthcare plans owing to the fact that the term is...
87 indicates the differences between prevailing and past accounting practices for pensions. The most substantial changes to previous practice have an impact on employer's accounting for a single-employer well-defined benefit pension plan, even though some provisions are also applicable to an employer that takes part in a multiemployer plan or sponsors a defined contribution plan. A major change is the transition from cash accounting to accrual accounting. The FASB in 1966 came to the conclusion that aspects such as cash that influence decisions in funding ought not to be permitted to influence accounting outcomes. In the application of accrual accounting to pensions, only three important elements of past pension accounting are maintained. These include reporting net cost, delaying recognition of particular events, and offsetting liabilities and assets (FASB, 2017).
Question Two
Taking the research done into consideration, there are recommended changes to the guidance or rules in the present day, which would enhance the financial accounting and reporting of Postretirement Health Care and Life Insurance Benefits. One of the key recommendations encompasses exposure, which takes into account placing an entity's total and complete pension together with other postretirement benefit liability less…
