Exam 19: Accounting for Post-Retirement Benefits

According to GAAP pension expense for a defined benefit pension plan consists of five components. Required: List and briefly describe each of the five components of net periodic pension cost that a company must recognize.

Which of the following is typically the most significant OPEB other postemployment benefits)?

The Pension Benefit Guaranty Corporation's purpose is to

Karen Company began a defined benefit pension plan on January 1, 2016. No prior service credit was granted to employees. Service costs amounted to $34,000 in 2016 and $37,000 in 2017. All contributions to the fund were made at the end of the year. A 10% discount rate was used. The expected and actual) rate of return of plan assets was 12%. Required: Prepare journal entries for December 31, 2016 and 2017, assuming: a. Funding equaled expense. b. $31,000 was funded each year. c. $38,000 was funded each year.

The cost of retroactive benefits granted in a plan amendment or at the initial adoption of a pension plan is called

A company's pension expense includes all of the following items except

Code: A = amortization of unrecognized prior service cost B = interest cost C = gain or loss to the extent recognized) D = service cost E = expected return on plan assets F = pension expense Which equation would be correct for the calculation of pension expense?

ERISA Pension Reform Act of 1974) provides guidance for

What estimates are necessary to account for a defined benefit pension plan?

On December 31, 2015, Clemson Company determined that the 2015 service cost on its defined benefit pension plan was $245,000. At the beginning of 2015, Clemson had pension plan assets totaling $990,000 and a projected benefit obligation of $750,000. Its discount rate and expected long-term rate of return on plan assets for 2015 were both 12%. Required: 1) Compute the amount of Clemson's pension expense for 2015. 2) Record the journal entries for Clemson's 2015 pension expense if it funds the pension plan in the amount of a) $225,000 and b) $210,000.

Postemployment benefits are provided to former employees

GAAP requires that a company record a loss and liability for termination benefits when

Gage began a defined benefit pension plan on January 1, 2015. During 2015, the service cost was $450,000. Gage contributed $450,000 to the pension plan for 2015. The actuary said the projected benefit obligation at December 31, 2015 was $450,000. As of December 31, 2015, what statements can Gage make about the pension plan? I. The pension plan is fully funded. II) Gage does not need to report a liability regarding the pension plan at December 31, 2015.

Which of the following statements regarding postretirement benefits other than pensions is true?

Disclosures for vested benefits

Which of the following would not be a component of pension expense?

The Maggie Company has a defined benefit pension plan for its employees. The following information pertains to the pension plan as of December 31, 2015: The amount of the December 31, 2015, projected benefit obligation is

A company must fund its pension plan each year at an amount that at least equals service cost for the year plus the amount needed to amortize any underfunding over a

The Peanut Company has a defined benefit pension plan for its employees. The following information pertains to the pension plan: The December 31, 2015 adjusting journal entries include a

In addition to providing pensions to their employees, many companies also offer other postemployment benefits. These are benefits going to former employees after employment but before retirement. Required: Describe how the cost of these benefits is to be accounted for under current GAAP.