Exam 20: Accounting for Pensions and Postretirement Benefits

In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as

Companies report Accumulated Other Comprehensive Income (PSC) as a liability on the balance sheet.

Which of the following is not a characteristic of a defined-contribution pension plan?

Companies compute the vested benefit obligation using only vested benefits, at current salary levels.

Which of the following is true of healthcare benefits?

If the Accumulated Other Comprehensive Income (G/L) account is less than the corridor, the net gains and losses are subject to amortization.

Rossi Company has a defined-benefit plan. At the end of 2015, it has determined the following information related to its pension plan: Projected benefit obligation \ 730,000 Accumulated benefit obligation 660,000 Fair value of pension plan assets 610,000 The amount of pension liability that is reported in Rossi's balance sheet at the end of 2015 is

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 unexpected gain or loss on plan assets in 2015 is

Rathke, Inc. has a defined-benefit pension plan covering its 50 employees. Rathke agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,400,000. Rathke determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 20% are expected to retire or quit each year. Assuming that Rathke uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is

A pension liability is reported when

The FASB makes it mandatory to use only the years-of-service method for amortization of prior service cost.

Presented below is information related to Noble Inc. as of December 31, 2015. Accumulated (/) \ 0,000 Projected benefit obligation 3,650,000 Accumulated benefit obligation 3,420,000 Vested benefits 1,620,000 Plan assets (at fair value) 3,354,000 Accumulated OCl (PSC) -0- The amount reported as the pension liability on Noble's balance sheet at December 31, 2015 is as follows:

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 in its income statement for the year ended December 31, 2015?Midland Bailey

Montoya Company has available the following information about its defined-benefit pension plan for the year ending December 31, 2015: Service cost for 2015 \ 25,000 Accumulated benefit obligation 683,000 Plan assets at fair value 630,000 Accumulated OCl (PSC) 300,000 Vested benefit obligation 505,000 Market-related asset value 725,000 Projected benefit obligation 845,000 Accumulated OCl net gain 90,000 Interest on projected benefit obliqation 64,000 Instructions (a) Calculate the pension asset / liability to be recorded at December 31, 2015. (b) Calculate the 2016 amortization of the net gain. The average remaining service life of employees is 10 years.

An employer does not have to report a liability on its balance sheet in a defined-benefit plan.

The relationship between the amount funded and the amount reported for pension expense is as follows:

The accounting for defined-benefit pension plans is the same under U.S. GAAP and IFRS.

In all pension plans, the accounting include all the following except

Use the following information for questions 88 and 89. The following information relates to Jackson, Inc.: -The amount reported as the liability for pensions on the December 31, 2015 balance sheet is

In a defined-benefit plan, the process of funding refers to