Question 1

The APBO increases each year by the:

Accepted Answer

A)  Interest accrued on the APBO and the portion of the EPBO attributed to that year.
B)  Interest accrued on the EPBO and the portion of the EPBO attributed to that year.
C)  Interest accrued on the APBO and the portion of the APBO attributed to that year
D)  Interest accrued on the EPBO and the portion of the APBO attributed to that year.E) A) and B)
F) A) and C)

Question 2

ERISA made major changes in the requirements for pension plan:

Accepted Answer

A)  Vesting.
B)  Reporting.
C)  Taxing.
D)  Investing.E) None of the above
F) A) and C)

Question 3

Brown Industries provides postretirement health care benefits to employees.On January 1 of the current calendar year,the following data were available.
  
Management amortizes prior service cost on a straight-line basis.The interest rate is 10%.Service cost for the current year is $95,000.
Required:
1)Calculate the prior service cost amortization for the current year.
2)Calculate the postretirement benefit expense for the current year.
3)Prepare the entry to record the postretirement benefit expense for the current year.

Accepted Answer

The answer of Brown Industries provides postretirement health care benefits...

Question 4

Use the following to answer questions 
The following data are for Guava Company's retiree health care plan for the current calendar year.
 
-What is the service cost to be included in the current year's postretirement benefit expense?

Accepted Answer

A)  $3,000.
B)  $3,180.
C)  $3,200.
D)  $4,000.E) A) and C)
F) B) and C)

Question 5

The following data are available pertaining to Firewall Corporation's retiree health plan for 2016:
  
Required:
1)What is the APBO at the beginning of 2016?
2)What is the interest cost for 2016?
3)What is service cost for 2016?
4)Prepare the journal entry to record the postretirement benefit expense for 2016.

Accepted Answer

1)$100,000 x 5/20 =$...

Question 6

Pension gains related to plan assets occur when:

Accepted Answer

A)  The return on plan assets is higher than expected.
B)  The vested benefit obligation is less than expected.
C)  Retiree benefits paid out are less than expected.
D)  The accumulated benefit obligation is more than expected.E) B) and D)
F) B) and C)

Question 7

Persoff Industries International has a defined benefit pension plan.The company revised its estimate of future salary levels causing its defined benefit obligation to increase by $16 million.Also,Persoff's $25 million actual return on plan assets exceeded the 5% high-grade corporate bond rate times the $440 million plan assets.Persoff prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) .The company will:

Accepted Answer

A)  Record a $3 million decrease in its plan assets.
B)  Record a $16 million gain-OCI.
C)  Change an amount in the equity section of the balance sheet to be subsequently amortized to pension expense.
D)  Change an amount in the equity section of the balance sheet that will never be amortized to pension expense.E) A) and B)
F) C) and D)

Question 8

Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer's balance sheet?

Accepted Answer

A)  Only the plan assets are separately reported.
B)  Only the PBO is separately reported.
C)  Both the PBO and the plan assets are separately reported.
D)  Neither the PBO nor the plan assets is separately reported.E) B) and C)
F) A) and B)

Question 9

Consider the following:
I.Present value of vested benefits at present pay levels.
II.Present value of nonvested benefits at present pay levels.
III.Present value of additional benefits related to projected pay increases.
Which of the above constitutes the projected benefit obligation?

Accepted Answer

A)  III only.
B)  I,II.
C)  I,II,III.
D)  II only.E) B) and C)
F) A) and D)

Question 10

Wainright Co.began the year with a net pension liability of $112 million (underfunded pension plan).Pension expense for the year included the following ($ in millions): service cost,$40;interest cost,$24;expected return on assets,$16;amortization of net loss,$8;amortization of prior service cost,$12.
Required:
Prepare the appropriate general journal entry to record Wainright's pension expense.

Accepted Answer

The answer of Wainright Co.began the year with a net...

Question 11

The employer has an obligation to provide future benefits for:

Accepted Answer

A)  Defined benefit pension plans.
B)  Defined contribution pension plans.
C)  Defined benefit and defined contribution plans.
D)  None of these answer choices are correct.E) A) and B)
F) A) and C)

Question 12

What is the 2016 service cost for Havana's plan?

Accepted Answer

A)  $276 thousand.
B)  $528 thousand.
C)  $648 thousand.
D)  Cannot be determined from the given information.E) All of the above
F) A) and B)

Question 13

Revenue and expense items and components of other comprehensive income can be reported in the statement of shareholders' equity using:

Accepted Answer

A)  U.S.GAAP.
B)  IFRS.
C)  Both U.S.GAAP and IFRS.
D)  Neither U.S.GAAP nor IFRS.E) None of the above
F) A) and D)

Question 14

Amortizing prior service cost for pension plans will:

Accepted Answer

A)  Decrease assets.
B)  Increase liabilities.
C)  Increase shareholders' equity.
D)  Decrease retained earnings.E) B) and C)
F) A) and B)

Question 15

A company's defined benefit pension plan had a PBO of $265,000 on January 1,2016.During 2016,pension benefits paid were $40,000.The discount rate for the plan for this year was 10%.Service cost for 2016 was $80,000.Plan assets (fair value) increased during the year by $45,000.The amount of the PBO at December 31,2016,was:

Accepted Answer

A)  $225,000.
B)  $305,000.
C)  $331,500.
D)  None of these answer choices is correct.E) C) and D)
F) A) and D)

Question 16

A net gain or net loss affects pension expense only if it exceeds 10% of the pension benefit obligation or 10% of plan assets,whichever is lower.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true?

Accepted Answer

A)  A projected benefits approach is used to determine the periodic pension expense.
B)  An accumulated benefits approach is used to determine the periodic pension expense.
C)  A vested benefits approach is used to determine the periodic pension expense.
D)  The pension expense is unrelated to the pension obligation.E) B) and C)
F) B) and D)

Question 18

When the service method is used for amortizing prior service costs,the amount recognized each year is:

Accepted Answer

A)  In proportion to the fraction of the total remaining service years worked during the year.
B)  A constant amount or fixed amount.
C)  Prior service cost divided by the average remaining service life of the active employee group.
D)  Prior service cost divided by the average estimated retirement age of the currently enrolled employee group.E) A) and B)
F) B) and D)

Question 19

Use the following to answer questions 
In its 2016 annual report to shareholders,JDS Corporation disclosed the following information about its pension plan:
  The increase in the underfunded projected benefit obligation was primarily attributable to a reduction in the assumed discount rate.This was combined with the effect of increases in benefits under the terms of the plan in excess of current inflation rates.The net result was reflected as a reduction in accumulated other comprehensive income.
-Explain how the loss is reported in the financial statements (other than the balance sheet).

Accepted Answer

The loss is reported as a component of o...

Question 20

Prior service cost is expensed immediately using:

Accepted Answer

A)  U.S.GAAP.
B)  IFRS.
C)  Both U.S.GAAP and IFRS.
D)  Neither U.S.GAAP nor IFRS.E) A) and D)
F) None of the above

Exam 17: Pensions and Other Postretirement Benefits

Correct Answer
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When the service method is used for amortizing prior service costs,the amount recognized each year is:

Correct Answer
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The loss is reported as a component of o...
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Pension gains related to plan assets occur when:

Correct Answer
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Which of the following is true?

Correct Answer
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Consider the following: I.Present value of vested benefits at present pay levels. II.Present value of nonvested benefits at present pay levels. III.Present value of additional benefits related to projected pay increases. Which of the above constitutes the projected benefit obligation?

Correct Answer
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A net gain or net loss affects pension expense only if it exceeds 10% of the pension benefit obligation or 10% of plan assets,whichever is lower.

Correct Answer
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Revenue and expense items and components of other comprehensive income can be reported in the statement of shareholders' equity using:

Correct Answer
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Correct Answer
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1)$100,000 x 5/20 =$...
View Answer

The APBO increases each year by the:

Correct Answer
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Amortizing prior service cost for pension plans will:

Correct Answer
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Prior service cost is expensed immediately using:

Correct Answer
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ERISA made major changes in the requirements for pension plan:

Correct Answer
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Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer's balance sheet?

Correct Answer
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Use the following to answer questions The following data are for Guava Company's retiree health care plan for the current calendar year. -What is the service cost to be included in the current year's postretirement benefit expense?

Correct Answer
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Correct Answer
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What is the 2016 service cost for Havana's plan?

Correct Answer
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The employer has an obligation to provide future benefits for:

Correct Answer
verified

Exam 17: Pensions and Other Postretirement Benefits

Correct AnswerverifiedShow Answer

When the service method is used for amortizing prior service costs,the amount recognized each year is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe loss is reported as a component of o...View AnswerShow Answer

Pension gains related to plan assets occur when:

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Consider the following: I.Present value of vested benefits at present pay levels. II.Present value of nonvested benefits at present pay levels. III.Present value of additional benefits related to projected pay increases. Which of the above constitutes the projected benefit obligation?

Correct AnswerverifiedShow Answer

A net gain or net loss affects pension expense only if it exceeds 10% of the pension benefit obligation or 10% of plan assets,whichever is lower.

Correct AnswerverifiedShow Answer

Revenue and expense items and components of other comprehensive income can be reported in the statement of shareholders' equity using:

Correct AnswerverifiedShow Answer

Correct Answerverified1)$100,000 x 5/20 =$...View AnswerShow Answer

The APBO increases each year by the:

Correct AnswerverifiedShow Answer

Amortizing prior service cost for pension plans will:

Correct AnswerverifiedShow Answer

Prior service cost is expensed immediately using:

Correct AnswerverifiedShow Answer

ERISA made major changes in the requirements for pension plan:

Correct AnswerverifiedShow Answer

Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer's balance sheet?

Correct AnswerverifiedShow Answer

Use the following to answer questions The following data are for Guava Company's retiree health care plan for the current calendar year. -What is the service cost to be included in the current year's postretirement benefit expense?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the 2016 service cost for Havana's plan?

Correct AnswerverifiedShow Answer

The employer has an obligation to provide future benefits for:

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
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The loss is reported as a component of o...
View Answer

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Correct Answer
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1)$100,000 x 5/20 =$...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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