Pensions as an important financial instruments Essay

Pensions as an important financial instruments - Essay Example Center of discussion in this paper are pensions as an important financial instruments that provide economic security to employees once they retire. A pension is a fixed payment that the beneficiary receives on a monthly basis once they reach retirement age. The use of pension plans by corporations became a mainstream practice in corporate America after World War II. In the United States pension plans have become more important than ever particularly for younger people due to the fact that the social security system is not going to be able to help younger adults. The most likely outcome is that generation X will not receive a social security check 30 years from now. Defined contribution plans must be disclosed in the financial statements of an organization. The things that must be reported in the financial statements in regards to pensions include the existence of the plan, the employee groups covered, the basis for determining contributions, and any significant matters affecting comp arability from period to period. The accounting treatment for defined benefit plans is a bit more complex. It is imperative that corporations make pension contributions that are sufficient to cover the benefits that are promised by the plan. Due to the fluctuating nature of the stock market, which is an investment mechanism used by pension managers to obtain a greater return for the beneficiaries, on many occasions pension funds are underfunded. The Pension Protection Act of 2006 stipulated that all corporate pension funds must be fully funded by the year 2013. Pension fund accounting requires the use of actuarial tools to estimate the future value of pension benefits. Two benefit approaches that can be used by accountants are accumulated benefits approach and years of service approach. The difference between the two methods is that one estimates annual pension cost and liability based on existing salary levels, while the other is based on the estimated final pay at retirement. The liability for pension benefits under the accumulated benefits approach is called accumulated benefits obligation, while the liability computed under the benefits/years of service approach is called projected benefit obligation (Clark & Cathey, 2011). The proliferation of the use of pension plans occurred after World War II. The accounting profession immediately took notice of the tendency. In 1956 the Committee on Accounting Procedures released Accounting Bulleting No. 47, Accounting for Costs of Pension Plans. ARB-47 required disclosure of unfunded vested benefits on the balance sheet (Duangplov & Pence, 2007). Pension funds were considered a legal liability after the inception of APB No. 8 in 1966. APB No. 8 also discusses the different components of pension costs. The three components of pension costs are normal costs, past service costs, and prior service costs. The underfunded pension cost became a liability in the balance

Israel and the Palestinians (CASE) Module 4 Essay

Israel and the Palestinians (CASE) Module 4 - Essay Example The situation between Israel and Palestine involves the USA and therefore, the USA risks her acquisition of oil and other resources from the Islam nations (Palestine Facts, 2009). In order to deal with the threat of terror that Israel seem to use as an excuse to intimidate Palestine, the USA should make use of her Foreign Policy to negotiate or intervene the conflict without political or economic bias. It has been reported that the USA’s taxpayers’ money has been funding Israel military operations within the Middle East. Without a clear indication of which nation is instigating or escalating the conflict, the USA has chosen to support Israel in both military and financial resources (Palestine Facts, 2009). The USA has several options on how to approach the conflict between Israel and Palestine conflict. From historical background, the USA has been in record for getting involved in various conflicts between other nations. With regards to these interventions, the USA’s Foreign policy, which is supported by other nations such as the UK, has been a doctrine for maintaining peace among nations. In this case, as a recommendation, the USA should consider the merits of the Foreign Policy before providing support to Israel. The US Foreign Policy is a doctrine supported by the US Constitution and merited by various other bodies such as the UN. Thus, while the USA may not be directly involved in providing military supports to Israel, there are various levels of conflicts that the USA overlooks. Israel has been openly endorsed by the USA in terms of military to carry out anti-terror operations in Gaza Strip and West Bank. As a ally to the USA, Israel has boasted superpower status within th e Middle East due to her military prowess. However, if the humanitarian clause of maintaining peace around the world in the US Foreign Policy holds, then the USA should withdraw support for Israel in order to apply diplomacy in approaching the