Questions -
1. A recent article noted that while "smoothing" is not necessarily an accounting virtue, pension accounting has long been recognized as an exception--an area of accounting in which at least some dampening of market swings is appropriate. This is because pension funds are managed so that their performance is insulated from the extremes of short-term market swings. A pension expense that reflects the volatility of market swings might, for that reason, convey information of little relevance. Are these statements true?
2. Understanding the impact of the changes required in pension reporting requires detailed information about its pension plan(s) and an analysis of the relationship of many factors, particularly the:
(a) Type of plan(s) and any significant amendments.
(b) Plan participants.
(c) Funding status.
(d) Actuarial funding method and assumptions currently used.
What impact does each of these items have on financial statement presentation?