Office Depot 2011 Annual Report Download - page 234

U.S. GAAP generally requires the use of the historical cost basis of accounting, except when an entity operates in a
highly inflationary economy. Accordingly, the comprehensive effects of inflation recognized under MFRS have
been eliminated in the accompanying reconciliation of consolidated net income and stockholders’ equity to U.S.
GAAP.
U.S. GAAP requires recognition of the fully overfunded or underfunded status of the liability for defined benefit
employee obligations, with an offsetting entry to other comprehensive income. The amounts included in other
comprehensive income are reclassified into results generally over the remaining service period of the
employees. Additionally, for certain termination benefits under MFRS, modifications to a plan and the related prior
service costs are recognized within results in the year of modification; under U.S. GAAP, these prior service costs
are recognized in other comprehensive income and amortized to results generally over the remaining service period
of the employees. Accordingly, the adjustment in the accompanying reconciliations of consolidated net income and
stockholders’ equity to U.S. GAAP include the recognition of the fully underfunded status of the obligation under
U.S. GAAP within other comprehensive income and (ii) the difference in recognition of prior service costs related to
certain termination benefits, given modifications to such benefits in 2010, for which under MFRS, the full amount o
f
the prior service costs were recognized in results in that year while for U.S. GAAP, these costs will continue to be
amortized to results over future years.
In addition, U.S. GAAP requires certain additional disclosures as shown below:
26
(ii)
E
mployee retirement obligations
—
Under MFRS, liabilities from seniority premiums, pension plans and severance
payment are recognized as they accrue, determined based on actuarial calculations using the projected unit credit
method. The liability recognized under MFRS does not include unrecognized items such as actuarial gains and
losses and prior service costs, which under MFRS, will be amortized to the liability generally over the remaining
service
p
eriod of the em
p
lo
y
ees.
Employee retirement
obligations
2011
Employee retirement
obligations
2010
(Unaudited)
As of December 31:
Pro
j
ected benefit obli
g
ation $ 41,780 $ 35,518
Change in benefit obligation:
Benefit obligation at beginning
of
y
ear 35,518 25,713
Service cost 9,255 9,096
Interest cost
2,880 2,029
Amortization of transition
obli
g
ation 3,558 1,848
Amortization of prior service
cost
1,371 2,445
Actuarial
g
ain (7,830) (1,838)
Benefit
p
aid (2,972) (3,775)
Benefit obligation at end of
y
ear $41,780 $35,518
Employee retirement
obligations
2011
Employee retirement
obligations
2010
(Unaudited)
Components of net periodic cost:
Service cost $9,255 $9,096
Interest cost 2,880 2,029
Amortization of transition obli
g
ation 3,590 1,976
Amortization of
p
rior service cost 1,371
—
Curtailment
(2,395)
—
Amortization of net
g
ain (4,466) (2,312)
Net
p
eriodic cost $ 10,235 $ 10,789