Assignment 2 ACC 410 Term Paper Example | Topics and Well Written Essays - 500 words

Assignment 2 ACC 410 - Term Paper Example Current GASB standards place pension expense as Annual Required Contribution (ARC) that stipulates unfunded liability be amortized over a period not more than 30 years. In addition, the funded status is not recorded in the financial statements, only explained in the footnotes. The disclosures are made under note 11: retirement Plans (p 19-23) under basic financial statements. The university participates in two cost-sharing multiple employer defined benefit pension plans, and two single employer defined contribution plans; both through two systems. Under the Employees Retirement System of Georgia, ERS the contribution rate is stipulated by law at 4% of annual compensation up to $4200 and 6% in Excess of $4200. The University of Georgia contributes in excess of 1.25% for each member in this scheme. A new plan for those hired after July 2009 exist, where members contribute 1.25% of annual compensation. The actuarial valuations for the old and new plan are 10.41%. The other system is the Teachers Retirement System of Georgia, TRS. Normal retirement benefits are equal to 2% of the member’s two highest subsequent years of service multiplied by the number of years of service. The member’s contribution is regulated by law to between 5-6%of his deductable salary. The contribution rate for 2011 is recorded as 5.53%, while the employer contribution for the same period is 10.28%. The monetary contributed for 2011 for the two models by the University for its Employees is $ 123,062 for ERS and 35,124,704 for TRS. 1. The immediate recognition of liability changes as a result of plan amendments and accelerated change in liability as a result of actuarial gains and losses together with the underlying actuarial assumptions mystifies pension expense and pension funding, as the ARC set the standard for funding in the current approach. 2. Furthermore, delinking pension expense and pension funding creates two different sets of

Capital Planning Research Paper Example | Topics and Well Written Essays - 500 words

Capital Planning - Research Paper Example That is why it is also known as "economic rate of return (ERR)". When multiple projects are presented to the organization, the project that gives the highest internal rate of return will be selected for investment. It is important to know about the net present value of the project because then the investor can decide whether it is worth investing in a project or not. When multiple projects are presented to the organization, all available future streams of returns, until its full useful life, will be converted to its present value and the project that gives highest net present value will be the most lucrative of the projects that are available for investment. Thus, net present value (NPV) is an appraisal technique to arrive at the conclusion to invest in a most lucrative project, from a financial perspective. Leasing is a novel way of financing machinery, equipment, computer or any other asset without paying the full amount upfront. The lessor (financer) and the lessee (receiver of the asset) are the two parties involved in any leasing agreement in which the lessee needs to pay agreed lease charges, monthly or yearly, for the use of the asset. The advantage is that the person need not worry about arranging funds to buy the asset. It is better to lease an asset in which obsolescence rate is quite high. When one is interested in using the asset rather than owning it, it is better to lease the asset (Murray, 2012). d) Comparing outright payment versus present value of all leasing rates to be paid over its useful life. If the present value of the leasing cost is not substantially higher than outright purchase (around 20%), I would go for leasing the