Exam 20: Accounting for Pensions and Postretirement Benefits

The following information is related to the postretirement benefits plan of Heerey, Inc. for 2015: Service cost \ 280,000 Discount rate 8\% APBO, January 1, 2015 2,250,000 EPBO, January 1, 2015 2,400,000 Actual return on plan assets in 2015 104,000 Expected return on plan assets in 2015 95,600 Amortization of PSC, due to benefit increase 107,200 Contributions (funding) 400,000 Benefit pavments 208,000 Instructions (a) Compute the amount of postretirement expense for 2015. (Show computations.)(b) Compute the amount of the APBO at December 31, 2015.

Pension liabilities will be impacted in countries where population aging is an issue. Which of the following countries/areas is the most rapidly aging in the developed world?

Use the following information for questions 74 through 76. The following data are for the pension plan for the employees of Lockett Company. Lockett's contribution was $420,000 in 2015 and benefits paid were $375,000. Lockett estimates that the average remaining service life is 15 years. -The corridor for 2015 was $300,000. The amount of AOCI-net loss amortized in 2015 was

Service cost is the expense caused by the increase in the accumulated benefit obligation because of employees' service during the current year.

In computing the service cost component of pension expense, the FASB concluded that

Barton, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2015. The service cost component of pension expense for 2015 is $450,000 and the amortization of prior service cost due to an increase in benefits is $60,000. The settlement rate is 10% and the expected rate of return is 9%. What is the amount of pension expense for 2015?

Under IFRS companies may recognize actuarial gains and losses in income immediately.

Use the following information for questions 86 and 87. Foster Corporation received the following report from its actuary at the end of the year: -The amount reported as the pension liability at December 31, 2014 is

Logan Corp., a company whose stock is publicly traded, provides a noncontributory defined-benefit pension plan for its employees. The company's actuary has provided the following information for the year ended December 31, 2015: Projected benefit obligation \ 700,000 Accumulated benefit obligation 525,000 Fair value of plan assets 825,000 Service cost 240,000 Interest on projected benefit obligation 24,000 Amortization of prior service cost 60,000 Expected and actual return on plan assets 82,500 The market-related asset value equals the fair value of plan assets. No contributions have been made for 2015 pension cost. In its December 31, 2015 balance sheet, Logan should report a pension asset / liability of

Ohlman, Inc. maintains a defined-benefit pension plan for its employees. As of December 31, 2015, the market value of the plan assets is less than the accumulated benefit obligation. The projected benefit obligation exceeds the accumulated benefit obligation. In its balance sheet as of December 31, 2015, Ohlman should report a liability in the amount of the

The Accumulated Other Comprehensive Income (G/L) account is amortized only if it exceeds 10 percent of the larger of the beginning balances of the projected benefit obligation or the market-related plan assets value.

The accountant for Marlin Corporation has developed the following information for the company's defined-benefit pension plan for 2015: The accumulated benefit obligation at December 31, 2015, amounted to $3,250,000. Instructions (a) Using the above information for Marlin Corporation, complete the pension work sheet for 2015. Indicate (credit) entries by parentheses. Calculated amounts should be supported. (b) Prepare the journal entry to reflect the accounting for the company's pension plan for the year ending December 31, 2015.

Whenever a defined-benefit plan is amended and credit is given to employees for years of service provided before the date of amendment

At December 31, 2015, the following information was provided by the Vargas Corp. pension plan administrator: Fair value of plan assets \ 4,500,000 Accumulated benefit obligation 5,580,000 Projected benefit obligation 7,400,000 What is the amount of the pension liability that should be shown on Vargas' December 31, 2013 balance sheet?

A pension fund gain or loss that is caused by a plant closing should be

Presented below is information related to Jones Department Stores, Inc. pension plan for 2015. Accumulated benefit obligation (at year-end) \ 600,000 Service cost 540,000 Funding contribution for 2015 480,000 Settlement rate used in actuarial computation 10\% Expected return on plan assets 9\% Amortization of PSC (due to benefit increase) 100,000 Amortization of net gains 48,000 Projected benefit obligation (at beginning of period) 470,000 Fair value of plan assets (at beginning of period) 360,000 Instructions (a) Compute the amount of pension expense to be reported for 2015. (Show computations.)(b) Prepare the journal entry to record pension expense and the employer's contribution for 2015.

When a company adopts a pension plan, prior service costs should be charged to

Gains or losses can represent changes in

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 corridor for 2015 is

Under U.S. GAAP companies may either recognize actuarial gains and losses in income immediately or amortize them over the expected service lives of employees.