Question 1

FASB Statement No. 87 states that prior service cost should be

Accepted Answer

A)  offset against current service cost. 
B)  recognized in the period of plan adoption or amendment. 
C)  amortized over the expected service period. 
D)  recorded as a prior period adjustment. 
A)  offset against current service cost. 
B)  recognized in the period of plan adoption or amendment. 
C)  amortized over the expected service period. 
D)  recorded as a prior period adjustment.

Question 2

Basic Technology Corporation has a noncontributory, defined-benefit pension plan. The following information relating to this plan was available at December 31, 2011, the end of the company's accounting period:
   
Required:
1. Compute the funded status of the PBO at the end of 2011.
2. Compute the net periodic pension expense for 2011.
3. Prepare the 2011 journal entry to record pension expense and funding of the plan.

Accepted Answer

The answer of Basic Technology Corporation has a noncontributory, defined-benefit...

Question 3

The following balances relate to the defined benefit pension plan of Todd Industries.
   
No benefits were paid in either 2010 or 2011.
Compute pension expense for 2010 and 2011, assuming minimum amortization is taken.

Accepted Answer

Computations:
PBO, 1/1/2010, used for 20

Question 4

Danny Ocean Corporation has an incentive compensation plan under which the sales manager receives a bonus equal to 10% of the company's income after deducting income taxes but before deducting the bonus. Income before income tax and the bonus is $80,000. The effective income tax rate is 40%. How much is the bonus?

Accepted Answer

A)  $4,320 
B)  $4,800 
C)  $5,000 
D)  $8,000 
A)  $4,320 
B)  $4,800 
C)  $5,000 
D)  $8,000

Question 5

Summers, Inc., pays its managers a bonus consisting of 7% of net income (income after deduction of both bonus and income taxes). The company's income tax rate is 20%. Income for the current year is $600,000.
How much bonus would be paid for the current year (rounded to whole dollars)?

Accepted Answer

A)  $42,000 
B)  $33,600 
C)  $31,818 
D)  $31,248 
A)  $42,000 
B)  $33,600 
C)  $31,818 
D)  $31,248

Question 6

Wright, Inc. has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes. Income before bonus and income taxes is $400,000. The effective income tax rate is 30 percent. How much is the bonus (rounded to the nearest dollar)?

Accepted Answer

A)  $40,000 
B)  $30,108 
C)  $28,000 
D)  $26,168 
A)  $40,000 
B)  $30,108 
C)  $28,000 
D)  $26,168

Question 7

Laid Back Corp. follows the practice of paying all employees for vacation. The vacation pay is not vested, but it carries over for one year if unused. Under GAAP, the obligation for earned but unused vacation should be

Accepted Answer

A)  accrued as a current liability. 
B)  disclosed as a contingent liability. 
C)  ignored until incurred. 
D)  accrued or not accrued according to the judgment of management. 
A)  accrued as a current liability. 
B)  disclosed as a contingent liability. 
C)  ignored until incurred. 
D)  accrued or not accrued according to the judgment of management.

Question 8

Pension-related estimates (not funding data) are provided by the

Accepted Answer

A)  employer company. 
B)  independent actuary. 
C)  pension fund trustees. 
D)  employee union. 
A)  employer company. 
B)  independent actuary. 
C)  pension fund trustees. 
D)  employee union.

Question 9

The following information relates to the defined benefit pension plan of the Rhodes Co.:

Accepted Answer

The answer of The following information relates to the defined...

Question 10

Natural Products, Inc., has a noncontributory, defined-benefit pension plan. At December 31, 2011, the end of the company's accounting period, the following pension-related data were available (000s):
   
Required:
1. Compute the 2011 net periodic pension expense.
2. Compute the 2011 funded status of the PBO.
3. Prepare the 2011 entry to record pension expense and funding.

Accepted Answer

The answer of Natural Products, Inc., has a noncontributory, defined-benefit...

Question 11

On January 1, 2011, Dibble Co. amended its defined benefit plan resulting in an increase in the projected benefit obligation of $700,000. As of the date of the amendment, Dibble Co. had 100 employees. Ten employees are expected to leave at the end of each of the next ten years. The minimum amount of amortization for prior service cost in 2012 (the second year) is

Accepted Answer

A)  $140,000. 
B)  $127,273. 
C)  $114,545. 
D)  $101,818. 
A)  $140,000. 
B)  $127,273. 
C)  $114,545. 
D)  $101,818.

Question 12

The following information relates to Irasly Inc. at December 31, 2011:
 
The total pension liability at December 31, 2011, for Irasly Inc. is

Accepted Answer

A)  $0. 
B)  $440,000. 
C)  $480,000. 
D)  $520,000. 
A)  $0. 
B)  $440,000. 
C)  $480,000. 
D)  $520,000.

Question 13

Blaine Inc. shows the following data relating to its pension plan for 2011:
 
What amount should Blaine report for pension expense in 2011?

Accepted Answer

A)  $206,000 
B)  $238,000 
C)  $242,000 
D)  $270,000 
A)  $206,000 
B)  $238,000 
C)  $242,000 
D)  $270,000

Question 14

Which of the following payroll taxes are paid by the employer?

Accepted Answer

A)  FICA taxes 
B)  Federal unemployment taxes 
C)  State unemployment taxes 
D)  All of these 
A)  FICA taxes 
B)  Federal unemployment taxes 
C)  State unemployment taxes 
D)  All of these

Question 15

Arctic Ice Inc. compensates its employees for certain absences. Employees can receive one day vacation plus one day sick leave for each month worked during the year. Unused vacation days may be carried forward, but unused sick leave expires within the year of employment. Employees are compensated according to their current pay rate. The following data were taken from the records for the year 2011.
   
Compute the amount that should be reported as a liability for compensated absences on December 31, 2011.

Accepted Answer

The answer of Arctic Ice Inc. compensates its employees for...

Question 16

The projected benefit obligation is the measure of pension obligation that

Accepted Answer

A)  can no longer be used under GAAP as an estimate for reporting the service cost component of pension expense. 
B)  is not an allowable estimate for reporting the service cost component of pension expense for defined benefit plans. 
C)  is one of several allowable estimates for reporting the service cost component of pension expense. 
D)  is the only allowable estimate for reporting the service cost component of pension expense. 
A)  can no longer be used under GAAP as an estimate for reporting the service cost component of pension expense. 
B)  is not an allowable estimate for reporting the service cost component of pension expense for defined benefit plans. 
C)  is one of several allowable estimates for reporting the service cost component of pension expense. 
D)  is the only allowable estimate for reporting the service cost component of pension expense.

Question 17

Which of the following isnot a component of net periodic pension cost?

Accepted Answer

A)  Interest cost 
B)  Actual return on plan assets 
C)  Benefits paid to retirees 
D)  Amortization of prior service cost 
A)  Interest cost 
B)  Actual return on plan assets 
C)  Benefits paid to retirees 
D)  Amortization of prior service cost

Question 18

The areas of pension plans and other post retirement benefits (such as health care benefits) appear on the surface to be quite similar. Nonetheless, the Financial Accounting Standards Board issued its pronouncement on other postretirement benefits some five years after the issuance of the pronouncement on pensions.
Explain why the FASB did not consider the areas of pensions and other post retirement benefits concurrently.

Accepted Answer

FASB did not consider pensions and other

Question 19

The following information relates to the defined benefit pension plan of the McDonald Company for the year ending December 31, 2011:
 
The net amount of the gain or loss component to be included in pension cost for 2011 would be

Accepted Answer

A)  $77,500. 
B)  $47,500. 
C)  $32,500. 
D)  $12,500. 
A)  $77,500. 
B)  $47,500. 
C)  $32,500. 
D)  $12,500.

Question 20

The projected benefit obligation is the actuarial present value of the benefits attributed to employee service rendered to date. The projected benefit obligation is based on the present value of vested and nonvested benefits accrued to date using employees' future salary levels.
Identify arguments that can be advanced for and against the use of the projected benefit obligation concept in accounting for pensions.

Accepted Answer

Opponents of the projected benefit oblig

FASB Statement No. 87 states that prior service cost should be

The following balances relate to the defined benefit pension plan of Todd Industries. No benefits were paid in either 2010 or 2011. Compute pension expense for 2010 and 2011, assuming minimum amortization is taken.

Summers, Inc., pays its managers a bonus consisting of 7% of net income (income after deduction of both bonus and income taxes). The company's income tax rate is 20%. Income for the current year is $600,000. How much bonus would be paid for the current year (rounded to whole dollars)?

Laid Back Corp. follows the practice of paying all employees for vacation. The vacation pay is not vested, but it carries over for one year if unused. Under GAAP, the obligation for earned but unused vacation should be

Pension-related estimates (not funding data) are provided by the

The following information relates to the defined benefit pension plan of the Rhodes Co.:

The following information relates to Irasly Inc. at December 31, 2011: The total pension liability at December 31, 2011, for Irasly Inc. is

Blaine Inc. shows the following data relating to its pension plan for 2011: What amount should Blaine report for pension expense in 2011?

Which of the following payroll taxes are paid by the employer?

The projected benefit obligation is the measure of pension obligation that

Which of the following isnot a component of net periodic pension cost?

The following information relates to the defined benefit pension plan of the McDonald Company for the year ending December 31, 2011: The net amount of the gain or loss component to be included in pension cost for 2011 would be

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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Exam 17: Employee Compensation-Payroll, Pensions, Other Comp Issues

FASB Statement No. 87 states that prior service cost should be

The following balances relate to the defined benefit pension plan of Todd Industries. No benefits were paid in either 2010 or 2011. Compute pension expense for 2010 and 2011, assuming minimum amortization is taken.

Summers, Inc., pays its managers a bonus consisting of 7% of net income (income after deduction of both bonus and income taxes). The company's income tax rate is 20%. Income for the current year is $600,000. How much bonus would be paid for the current year (rounded to whole dollars)?

Laid Back Corp. follows the practice of paying all employees for vacation. The vacation pay is not vested, but it carries over for one year if unused. Under GAAP, the obligation for earned but unused vacation should be

Pension-related estimates (not funding data) are provided by the

The following information relates to the defined benefit pension plan of the Rhodes Co.:

The following information relates to Irasly Inc. at December 31, 2011: The total pension liability at December 31, 2011, for Irasly Inc. is

Blaine Inc. shows the following data relating to its pension plan for 2011: What amount should Blaine report for pension expense in 2011?

Which of the following payroll taxes are paid by the employer?

The projected benefit obligation is the measure of pension obligation that

Which of the following isnot a component of net periodic pension cost?

The following information relates to the defined benefit pension plan of the McDonald Company for the year ending December 31, 2011: The net amount of the gain or loss component to be included in pension cost for 2011 would be

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters