Exam 20: Accounting for Pensions and Postretirement Benefits

Seigel Co. maintains a defined-benefit pension plan for its employees. At each balance sheet date, Yeager should report a pension asset / liability equal to the

The Pension Asset / Liability account balance equals the difference between the projected benefit obligation and the fair value of pension plan assets.

Use the following information for questions 80 through 84. The following information relates to the pension plan for the employees of Turner Co.: Turner estimates that the average remaining service life is 16 years. Turner's contribution was $882,000 in 2015 and benefits paid were $658,000. -The actual return on plan assets in 2015 is

On January 1, 2015, McGee Co. had the following balances: Projected benefit obligation \ 7,400,000 Fair value of plan assets 7,400,000 Other data related to the pension plan for 2015: Service cost 315,000 Contributions to the plan 459,000 Benefits paid 450,000 Actual return on plan assets 444,000 Settlement rate 9\% Expected rate of return 6\% Instructions (a) Determine the projected benefit obligation at December 31, 2015. There are no net gains or losses. (b) Determine the fair value of plan assets at December 31, 2015. (c) Calculate pension expense for 2015.(d) Prepare the journal entry to record pension expense and the contributions for 2015.

Which of the following items should be included in pension expense calculated by an employer who sponsors a defined-benefit pension plan for its employees?

The accumulated benefit obligation bases the deferred compensation amount on both vested and nonvested service using future salary levels.

Presented below is information related to the pension plan of Zimmer Inc. for the year 2015. 1. The service cost related to pension expense is $240,000 using the projected benefits approach. 2. The projected benefit obligation and the accumulated benefit obligation at the beginning of the year are $320,000 and $280,000, respectively. The expected return on plan assets is 9% and the settlement rate is 10%. 3. The accumulated OCI - prior service cost at the beginning of the year is $140,000. The company has a workforce of 200 employees, all who are expected to receive benefits under the plan. The total number of service-years is 1,000 and the service-years attributable to 2015 is 200. The company has decided to use the years-of-service method of amortization for these costs. 4. At the beginning of the period, fair value of pension plan assets, $280,000. The company had an Accumulated OCI (loss) at the beginning of the period of $90,000. Any amortization of unrecognized net loss is recognized on a straight-line basis over the average remaining service-life of the employees." 5. The contribution made to the pension fund in 2015 was $229,000. Instructions (a) Determine the pension expense to be reported on the income statement for 2015. (Round all computations to nearest dollar.) (b) Prepare the journal entry(ies) to record pension expense for 2015."

Miles Co. had the following selected balances at December 31, 2015: Projected benefit obligation \ 4,650,000 Accumulated benefit obligation 4,550,000 Fair value of plan assets 4,340,000 Accumulated OCl (PSC) 170,000 InstructionsCalculate the pension asset / liability to be recorded at December 31, 2015.

Presented below is pension information related to Waters Company as of December 31, 2015: Accumulated benefit obligation \ 3,000,000 Projected benefit obligation 3,500,000 Plan assets (at fair value) 3,750,000 Accumulated (/) 100,000 The amount to be reported as Pension Asset / Liability as of December 31, 2015 is

According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

Which of the following is recognized in the accounts and in the financial statements?

Which of the following disclosures of pension plan information would not normally be required?

Gibbs Company has 200 employees who are expected to receive benefits under the company's defined-benefit pension plan. The total number of service-years of these employees is 2,000. The actuary for the company's pension plan calculated the following net gains and losses: Prior to 2014, there was no unrecognized net gain or loss.Information about the company's projected benefit obligation and market-related (and fair) value of plan assets follows: InstructionsBased on the above information about Gibbs Company, prepare a schedule which reflects the amount of net gain or loss to be amortized by the company as a component of pension expense for the years 2014, 2015, and 2016. The company amortizes net gains or losses using the straight-line method over the average service life of participating employees.

A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the

Use the following information for questions 93 and 94. On January 1, 2015, Parks Co. has the following balances: The settlement rate is 10%. Other data related to the pension plan for 2015 are: Service cost \ 240,000 Amortization of prior service costs 54,000 Contributions 270,000 Benefits paid 250,000 Actual return on plan assets 264,000 Amortization of net gain 18,000 -The balance of the projected benefit obligation at December 31, 2015 is

Midland Company follows U.S. GAAP for its external financial reporting whereas Bailey Company follows IFRS for its external financial reporting. The remaining service lives of employees at both firms is estimated to be 10 years. The following information is available for each company at December 31, 2015 related to their respective defined-benefit pension plans. What is the amount of Pension Asset/Liability recognized by each company in its balance sheet at December 31, 2015?

Differing measures of the pension obligation can be based on

The following information is related to the Stone Co. postretirement benefits plan for 2015: Service cost \ 163,000 Discount rate 10\% EPBO, January 1, 2015 820,000 APBO, January 1, 2015 660,000 Actual return on plan assets in 2015 22,400 Expected return on plan assets in 2015 29,000 Contributions (funding) 224,000 Instructions (a) Compute the amount of postretirement expense for 2015. (Show computations.)(b) Prepare the journal entry to record postretirement expense and Stone's contributions for 2015.

Which of the following statements about the expected postretirement benefit obligation (EPBO) is not correct?

The difference between the expected return and the actual return is referred to as the unexpected gain or loss.