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THE EARNINGS IMPLICATIONS OF PENSION EXPENSE: A STOCHASTIC ANALYSIS OF TEN CANADIAN COMPANIES
- Article from:
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North American Actuarial Journal
- Article date:
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October 1, 2005
- Author:
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Copyright informationCopyright Society of Actuaries Oct 2005. Provided by ProQuest LLC. (Hide copyright information)
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ABSTRACT
Recent challenges to the actuarial pension model and a movement to harmonize international accounting standards both suggest that the current Canadian standards for pension accounting, CICA 3461, may see substantial revision during upcoming years. To understand better the implications of these possible accounting changes, this paper presents the results of a stochastic analysis that quantifies how the volatility of pension expense for a sample of ten Canadian companies sponsoring defined benefit plans will be increased by the adoption of immediate recognition accounting. For certain companies this increase is significant and is shown to have a material earnings impact. The ...
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