Office Depot 2012 Annual Report Download - page 166

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 (i) 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.
In addition, U.S. GAAP requires certain additional disclosures as shown below:
24
(ii)
E
mployee benefits
—
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 period of
the em
p
lo
y
ees.
Employee benefits
2012
Employee benefits
2011
As of December 31:
Pro
j
ected benefit obli
g
ation $ 45,804 $ 41,780
Change in benefit obligation:
Benefit obli
g
ation at be
g
innin
g
of
y
ear 41,780 35,518
Service cost 10,913 9,255
Interest cost
2,954 2,880
Amortization of transition obli
g
ation 128 3,558
Amortization of
p
rior service cost 974 1,371
Actuarial
g
ain (239) (7,830)
Benefits
p
aid (10,706) (2,972)
Benefit obli
g
ation at end of
y
ear $45,804 $41,780
Employee benefits
2012
Employee benefits
2011
Components of net periodic cost:
Service cost $ 10,912 $ 9,255
Interest cost 2,954 2,880
Amortization of transition obli
g
ation 128 3,590
Amortization of
p
rior service cost 112 1,371
Effect of personnel reduction or early
termination (other than a restructuring or
discontinued o
p
eration)
—
(2,395)
Amortization of net
g
ain (197) (4,466)
Net
p
eriodic cost $ 13,910 $ 10,235