Term
| What is a vested benefit obligation? |
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Definition
| The portion of the accumulated benefit obligation that plan participants are entitled to receive regardless of their continued employment. |
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Term
| How do the returns earned on investment securities affect the plan asset balance? |
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Definition
| The plan asset balance would be increased by returns on investment securities. |
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Term
| How is the PBO recognized in the balance sheet? |
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Definition
| The PBO is not formally recognized in the balance sheet. |
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Term
| Under an ABO, how are possible future pay increases handled? |
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Definition
| An ABO ignores possible future pay increases. |
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Term
| What is the difference between a Defined contribution plan and a Defined benefit plan? |
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Definition
| A defined contribution plan promises fixed annual contributions to a pension fund, without further committment regarding benefit amounts at retirement, while defined benefit plans promise fixed retirement benefits defined by a designated formula and the employer sets aside cash each year to provide funds to pay the promised benefits. |
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