FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Pensions and Other Postretirement Benefits

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Amortizing a net gain for pensions and other postretirement benefit plans will:

A) Increase retained earnings and increase accumulated other comprehensive income.
B) Decrease retained earnings and decrease accumulated other comprehensive income.
C) Increase retained earnings and decrease accumulated other comprehensive income.
D) Decrease retained earnings and increase accumulated other comprehensive income.

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Pension benefits and postretirement health benefits typically are similar in their:

A) Application of present value concepts.
B) Vesting policies.
C) Coverage for eligible dependents.
D) Relationship between cost of coverage and length of service.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

The PBO is increased by:

The attribution period for postretirement health care plans does not include:

Oberon Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current year, the following plan-related data were available. On January 1 of the current year, Oberon amended the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $10,000,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $60,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year. $\begin{array} { l l } \text { Net loss-postretirement benefit plan } & \$ 10,600,000 \\\text { APBO balance } & \$ 104,000,000 \\\text { Fair value of plan assets } & \text { none } \\\text { Average remaining service period to retirement } & 20 \text { years } \\\text { Average remaining service period to full eligibility } & 15 \text { years }\end{array}$

Compared to the ABO, the PBO usually is:

Recording pension expense might:

The process of assigning the cost of postretirement benefits to the years during which those benefits are assumed to be earned by employees is called:

What is OTC's pension expense for the year?

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed,

The estimated medical costs are expected to be $7,500 during an employee's retirement. The retiree is expected to pay 30% of the cost and Medicare is expected to pay 50% of the cost. What is the company's estimated net cost of benefits?

Lasagna Corporation has a defined benefit pension plan. Lasagna received the following information for the current calendar year: The expected long-term return on plan assets is 10%. There were no other relevant data for the year. Required: 1) Determine Lasagna Corporation's pension expense for the year. 2) Prepare the journal entries to record the pension expense and funding for the year. Projected benefit obligation $\begin{array}{lr}\text { Balance, January 1 } & \$ 100,000,000 \\ \text { Service cost } & 18,000,000 \\ \text { Interest cost } & 10,000,000 \\ \text { Benefits paid } & (8,000,000) \\ \text { Balance, December 31 } & \$ 120,000,000\end{array}$ Plan assets $\begin{array}{lr}\text { Balance, January 1 } & \$ 70,000,000 \\ \text { Actual return on plan assets } & 7,000,000 \\ \text { Contribution } & 16,000,000 \\ \text { Benefits paid } & (8,000,000) \\ \text { Balance, December 31 } & \$ 85,000,000\end{array}$

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

The net pension liability (PBO minus plan assets) is increased by:

DeAngelo Yards, Inc. calculated pension expense for its underfunded pension plan as follows: Required: Which elements of DeAngelo's balance sheet are affected by the components of pension expense? What are the specific changes in these accounts? $\begin{array}{lr}&\text { ( } \$ \text { in millions) }\\\text { Service cost } & \$ 448 \\\text { Interest cost } & 300 \\\text { Expected return on the plan assets ( } \$ 200 \text { actual, less } \$ 20 \text { gain) } & (180) \\\text { Amortization of prior service cost } & 16 \\\text { Amortization of net loss } & 4\\\text { Pension expense }&\$588\end{array}$

Travis Transportation reported a net loss-AOCI in last year's balance sheet. This year, the company revised its estimate of future salary levels causing its PBO estimate to decline by $12. Also, the $24 million actual return on plan assets was less than the $27 million expected return. Required: 1) Prepare the appropriate journal entries to record the gain and loss. 2) How do this gain and loss affect Travis' income statement, statement of comprehensive income, and balance sheet?

With respect to Ralph, what is the service cost to be included in Oregon's 2009 postretirement benefit expense, rounded to the nearest dollar?

What was the prior service cost at the beginning of the year?

Consider the following: I. present value of vested benefits at present pay levels II) present value of non-vested 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?

Accumulated other comprehensive income: