Exam 20: Accounting for Postemployment Benefits

Current GAAP requires that a company with a defined benefit pension plan disclose a reconciliation of the beginning and ending balances of the projected benefit obligation. Required: State the items that must be included in this disclosure.

Exhibit 20-2 Minnie Co.has an unfunded prepaid/accrued pension cost of $2, 000 (debit balance)at December 31, 2010.The following information pertains to 2011: Pension expense \ 320,000 Projected benefit obligation, December 31, 2011 840,000 Contributions 330,000 Plan assets (fair value), December 31, 2011 810,000 -Refer to Exhibit 20-2.The balance in Prepaid/Accrued Pension Cost at December 31, 2011, should be

Which of the following would not be a component of pension expense?

Exhibit 20-3 The Grace Company adopted a defined benefit pension plan on January 1, 2010, and prior service credit was granted to employees.The present value of those benefits was calculated to be $1, 351, 800 at that date.The service cost is funded in full at the end of each year, plus an additional amount of $220, 000 is funded each year-end.The unrecognized prior service cost is being amortized by the straight-line method over the remaining 10-year service life of the company's active employees.Additional information relating to the company's pension plan is presented below: 2010 2011 Service cost (annual) \ 95,000 \ 105,000 Unrecogrized prior service cost amortization 135,180 135,180 Interest cost 10\% 10\% Expected (and actual) return on plan assets 10\% 10\% - Refer to Exhibit 20-3.What is the correct balance in Prepaid/Accrued Pension Cost at December 31, 2010?

The interest rate that may be used to compute the interest cost component of pension expense is equal to the

ACME has a defined benefit pension plan.ACME is preparing the December 31, 2010 financial statement disclosures related to the plan assets.It should disclose which of the following? I.Expected Return on Plan Assets II.Actual Return on Plan Assets

The expense for other postretirement benefits, such as health care benefits, dental benefits, and eye care benefits, currently is accounted for

The Pension Benefit Guaranty Corporation's purpose is to

Amortization of any unrecognized net gain or loss is included in pension expense of a given year if at the

A pension plan provides for future retirement income based on the employee's income and length of service with the company.This type of pension plan is termed a

Exhibit 20-1 Given the following information: 2010 2011 2012 Projected benefit obligation \ 600 \ 700 \ 1,200 Plan asset value 400 800 1,100 Average remaining service life = 5 years An unrecognized net loss existed at the beginning of 2010 in the amount of $100.An additional unrecognized net loss of $20 is reported by actuaries as of the end of 2011. - Refer to Exhibit 20-1.What amount of loss should be added to pension expense in 2012?

Code: = amortization of unrecogrized prior service cost = interest cost = gain or loss(to the extent recogrized = service cost = expected return on plan assets = net periodic pension expense to be reported on the income statement Which equation is correct?

If an employer were to account for a defined benefit pension plan on the cash basis, it would be a violation of the

Danielle Company adopted a defined benefit pension plan on January 1, 2010, and prior service credit was granted to employees.The present value of that prior service obligation as of January 1, 2010 was $1, 400, 000 and is being amortized by the straight-line method over the remaining 20-year service life of the company's active employees.Additional information relating to the company's pension plan for 2010 is presented below: Annual service cost \ 132,000 Contribution to the plan (December 31,2010) 390,000 Interest cost 10\% Expected (and actua) return on plan assets 12\% What amount should be recorded in Prepaid/Accrued Pension Cost when recording the 2010 pension expense and funding at December 31, 2010?

Which of the following pension-related definitions is not correct?

Samantha Co.has a defined benefit pension plan that has experienced differences between its expected and actual projected benefit obligation.Data on the plan as of January 1, 2010, follow: Unrecogrized net gain \ 88,000 Fair value of plan assets 250,000 Actual projected benefit obligation 280,000 There was no difference between the company's expected and actual return on plan assets during 2010.The average remaining service life of the company's employees is 12 years. Required: Determine the amount of the net gain or loss to be included in pension expense for 2010 and indicate whether it is an increase or decrease in the pension expense calculation.

The Margie Company has a defined benefit pension plan for its employees.The following information pertains to the pension plan as of December 31, 2010: Projected benefit obligation, January 1, 2010 \ 1,600,000 Service cost, 2010 750,000 Interest cost, 2010 100,000 Payments to retired employees 80,000 Actual return on plan assets 99,600 The amount of the December 31, 2010, pension benefit obligation is

Accounting principles for defined benefit pension plans under IFRS differ from U.S.GAAP in all of the following areas except that under IFRS

Which statement is not true?