Exam 20: Accounting for Pensions and Postretirement Benefits

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 Prior Service Cost recognized by each company on its balance sheet at December 31, 2015?

In a defined-benefit plan, a formula is used that

Use the following information for questions 68 through 70. The following information for Cooper Enterprises is given below: There were no actuarial gains or losses at January 1, 2015. The average remaining service life of employees is 10 years. -What is the amount that Cooper Enterprises should report as its pension liability on its balance sheet as of December 31, 2015?

The computation of pension expense includes all the following except

The projected benefit obligation is the measure of pension obligation that

Huggins Company has the following information at December 31, 2015 related to its pension plan: Projected benefit obligation \ 4,000,000 Accumulated benefit obligation 3,200,000 Plan assets (fair value) 4,350,000 Accumulated (PSC) 300,000 The amount of pension asset / liability Huggins Company would recognize at December 31, 2015 is

Use the following information for questions 77 and 78. On January 1, 2015, Newlin Co. has the following balances: The settlement rate is 10%. Other data related to the pension plan for 2015 are: Service cost \ 180,000 Amortization of prior service costs due to increase in benefits 60,000 Contributions 300,000 Benefits paid 135,000 Actual return on plan assets 237,000 Amortization of net gain 18,000 -The balance of the projected benefit obligation at December 31, 2015 is

Employers are at risk with defined-benefit plans because they must contribute enough to meet the cost of benefits that the plan defines.

A pension plan is contributory when the employer makes payments to a funding agency.

Selected Information about the pension plan of Roman Co. is as follows: Instructions (a) What is the corridor for 2015? (b) Calculate the pension asset / liability at December 31, 2015. (c) Prepare the entry for 2015 to record the pension expense and contribution.

A pension asset is reported when

Presented below is information related to Decker Manufacturing Company as of December 31, 2015: Projected benefit obligation \ 850,000 Accumulated OCl -net gain 300,000 Accumulated OCl (PSC) 405,000 The amount for the prior service cost is related to an increase in benefits. The fair value of the pension plan assets is $600,000.The pension asset / liability reported on the balance sheet at December 31, 2015 is

Which of the following is false regarding the accounting for pensions under IFRS and U.S. GAAP?

Use the following information for questions 68 through 70. The following information for Cooper Enterprises is given below: There were no actuarial gains or losses at January 1, 2015. The average remaining service life of employees is 10 years. -What is the pension expense that Cooper Enterprises should report for 2015?

In accounting for a defined-benefit pension plan

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 fair value of plan assets at December 31, 2015 is

The interest on the projected benefit obligation component of pension expense

When a company amends a pension plan, for accounting purposes, prior service costs should be

The IASB and the FASB are studying several issues related to accounting for pensions including all of the following except

The interest component of pension expense in the current period is computed by multiplying the settlement rate by the beginning balance of the projected benefit obligation.