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

Alta Corporation has a pension plan that has a provision that employees will receive benefits upon retirement even though the employees are not working for the company at the time of retirement. Such a plan is characterized as

Employers use a discount rate to compute the actuarial present value of benefits, pension expense, and the obligation of the employer under the pension plan. The choice of the discount rate can have a great effect on measures of pension cost and benefit obligations. Assumptions regarding discount rates must be made carefully in order to ensure that differences in pension plans are properly reflected in the annual reports of companies sponsoring such plans. Identify factors employers should consider when choosing the discount rate to be used in accounting for pension plans of the enterprise.

On January 1, 2011, Cubs Corporation adopted a defined benefit pension plan. The plan's service cost of $150,000 was fully funded at the end of 2011. Prior service cost was funded by a contribution of $60,000 in 2011. Amortization of prior service cost was $24,000 for 2011. What is the amount of Cub's prepaid pension cost at December 31, 2011?

West Communications is considering adopting a bonus plan for its executives. Two plans are currently being evaluated. The first plan involves executives receiving a bonus of 8 percent of company earnings calculated on income after deduction for bonus but before deduction for income tax. The second plan involves a bonus of 12 percent calculated on income after deductions for both bonus and income tax. Income tax is 30 percent of income after bonus. If income before bonus and taxes for the year is estimated to be $100,000, which bonus plan would company executives prefer?

Using the information below, compute the gain or loss component of net periodic pension cost and indicate whether the amount is added or deducted in determining pension cost for the period.

Robinson Company adopted a defined benefit pension plan on January 1, 2011. Robinson amortizes the prior service cost over 16 years and funds prior service cost by making equal payments to the fund trustee at the end of each of the first ten years. The service cost is fully funded at the end of each year. The following data are available for 2011: If interest cost for 2011 is equal to the return on plan assets, then Robinson's prepaid pension cost at December 31, 2011, is

Piston Corporation has the following pension information for the year ended December 31, 2011: Assuming the expected return on plan assets and the settlement rate are both 10 percent, what amount should Piston report for pension expense for 2011?

Total pension expense recognized over the life of a pension plan will be

The interest cost component for other postretirement benefits is determined using

Which of the following taxes must be paid by both the employee and the employer?

FASB Statement No. 132R requires that the notes accompanying the financial statements include a schedule reconciling the

The vested benefits of an employee in a pension plan represent benefits

Which of the following is not a required note disclosure related to pension plans under SFAS No. 132R, "Employers' Disclosures about Pensions and Other Postretirement Benefits?

On January 1, 2011, Crowther Co. estimated a projected benefit of $440,000 based on a settlement rate of 12 percent. Pension benefits paid to retirees totaled $60,000. Service costs for 2011 amounted to $148,000. The fair value of the plan assets were $350,000 and $400,000 on December 31, 2010, and December 31, 2011, respectively. The projected benefit obligation at December 31, 2011, was

One component of net pension expense, unrecognized gains and losses, comes from which of the following sources?

The amount of the expected return on plan assets is computed by multiplying the

Which of the following accounting principles best describes the rationale for reporting a liability for earned but unused compensated absences?

Northwest Company determined that it has an obligation relating to employees' rights to receive compensation for future absences attributable to employees services already rendered. The obligation relates to rights that vest, and payment of the compensation is probable. The amounts of Northwest's obligations as of December 31 are reasonably estimated as follows: In its December 31 balance sheet, what amount should Northwest report as its liability for compensated absences?

Which of the following represents the best description of the projected benefit obligation at any balance sheet date?

During the first week of January, Sam Jones earned $200. Assume that FICA taxes are 7.65 percent of wages up to $50,000, state unemployment tax is 5.0 percent of wages up to $13,000, and federal unemployment tax is 0.8 percent of wages up to $13,000. Assume that Sam has voluntary withholdings of $10 (in addition to taxes) and that federal and state income tax withholdings are $18 and $6, respectively. Using the information above, what is the employer's payroll tax expense for the week, assuming that Sam Jones is the only employee?