Acquisitions

MEMORANDUM

Date: July 19, 2015

To: Senior Accountant

From: Accountant

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Re: New Acquisition

Our company has acquired a new manufacturing company, which is new to our industry, as well as our accounting procedures. The new company includes two segments, and two different pension plans. Our first goal is to identify the required reporting for defined contributions, defined benefits, and other postretirement benefit plans. Our second goal is to define the steps to eliminate the two segments within the guidelines of the FASB and GASB. My first step is to give you a background on what defined contributions, defined benefits and other postretirement benefits are. Defined contributions are moneys allocated to a plan an employer and employee contributes to. This plan is tax deferred and the employer chooses the contribution schedule, vesting rules, income options and investment choices. The employee has the option to allocate the contribution from the employer’s investment choices. Examples of defined contributions are 401(K) or 403(B). Defined benefits are qualified retirement contract agreements that pays a specified amount at the time an employee retires. These payments are typically life annuities and they begin at the plan’s stated retirement age and ends when the accountholder passes away. Other post-retirement benefits are non-cash benefits available to employees. These benefits include life insurance, medical plans, dental and vision care, legal services and tuition credits.

Back to our main goals for this acquisition, our first goal is to be able to report these benefits in our financial statements. The rules for reporting defined contributions and defined benefits are very similar. I will try to combine as much as I can when possible, and will indicate which plan has its own disclosures and rules. According to FASB codification statement no. 962-205-45-1 (defined contributions) and statement 960-205-45-1...