A formula that defines benefits similarly for all years of service is referred to as a benefits/years-of-service approach. In many cases, the association between service and benefits is not clear and is computed using an appropriate actuarial method. In general, Topic 715 requires the use of the projected unit credit actuarial method.
projected unit credit actuarial method
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amortized prior service cost
Amortized prior service costs are one of the five components of pension expense. The other components are service cost, interest cost, expected return on plan assets, and amortized gains or losses.
amortized gains or losses
Often referred to as the actuarial gains or losses, this is one of five components of pension expense. The other components are service cost, interest cost, expected return on assets and amortized prior service cost.