Defined Contribution Plans

o Defined by agreement
o Dependent on success of employees investment
o Employer deposits an agreed-upon amount into an employee-directed investment
fund
o Employee bears all risk of pension fund performance
Defined Benefits Plan
o Defined by pension formula
o Dependent on success of employers investments
o Employer is committed to specified retirement benefits
o Retirement benefits are based on a formula that considers years of service,
compensation level, and age
o Employer bears all risk of pension fund performance
PBO
o Service Cost
Increase in PBO attributable to employee service performed during the
period
o Interest Cost
Interest on PBO during the period
o Prior Service Cost
Increase in PBO due to a plan change that provides credit for employee
service rendered in prior years
o Loss/Gain on PBO
Revising estimates used to determine PBO
o Retiree Benefits Paid
Reduce PBO
Pension Plan
o Plan Assets netted with PBO
Net Pension Asset (Debit)
Net Pension Liability (Credit)
o Overfunded
Market value of plan assets exceeds the actuarial present value of all
benefits earned by participants
o Underfunded
Market value of plan assets is below the actuarial present value of all
benefits earned by participants
o PBO-Plan Assets=Under/Overfunded Status(reported on balance sheet)
Gains/Losses
o Only if net g/l exceeds the corridor is a charge to pension expense allowed
o Corridor
10% of greater of PBO or Plan Assets
OPEB
o Expected Postretirement Benefit Obligation

The actuarys estimate of the total postretirement benefits expected to be

received by plan participants
o Accumulated Postretirement Benefit Obligation
Portion of EPBO attributed to employee service to date
Authorized Shares
o Maximum number of shares of capital stock that can be sold to public
o Issued Shares
Shares of stock that have been sold
Outstanding Shares
o Shares that are owned by stockholders
Treasury Shares
o Shares that have been reacquired by the corporation
Retired Shares
o Same status as authorized but unissued shares
o Unissued Shares
Shares of stock that never have been sold
Capital Stock
o Common Stock
Basic voting stock of the corporation
Ranks after preferred stock for dividend and liquidation distribution
Dividends determined by board of directors
o Preferred Stock
Does not have voting rights
Par or stated value
Dividend and liquidation preference over common stock
Convertible, callable, and redeemable
Share Issue Costs
o Reduce net proceeds from selling shares, resulting in a lower amount of additional
paid-in capital
Stock Repurchases
o Retired
No longer issued
o Placed in Treasury (Treasury Stock)
Issued but not outstanding
EPS
o Time-Weight
New shares for the fraction of year theyre outstanding
Treasury Shares (not outstanding/remaining months)
o Antidilutive
Increase rather than decrease
Securities ignored in calculation