Question 1

Which of the following statements is true regarding a defined benefit pension plan?

Accepted Answer

A)  Defined benefit plans are relatively easy to handle from an accounting perspective. 
B)  Employers that use defined benefit plans are assuming more risks than employers that use defined contribution plans. 
C)  Defined benefit plans require an employer to contribute a defined sum each period to a pension fund. 
D)  A defined benefit plan requires the employer to fund the plan each year for an amount equal to the pension expense. 
A)  Defined benefit plans are relatively easy to handle from an accounting perspective. 
B)  Employers that use defined benefit plans are assuming more risks than employers that use defined contribution plans. 
C)  Defined benefit plans require an employer to contribute a defined sum each period to a pension fund. 
D)  A defined benefit plan requires the employer to fund the plan each year for an amount equal to the pension expense.

Question 2

Two were expected to retire at the end of 2020, two more at the end of 2022, and four at the end of 2024.
Required:
Using the years-of-future-service method, compute the amount of prior service cost to be amortized in the first year.

Accepted Answer

$24,000, d

Question 3

Under contributory plans the employees bear the majority of the risks of the plan and contribute towards the plan with deductions from their salaries.

Accepted Answer

A) True 
 B)False

Question 4

Marjorie, Inc.'s records contained the following data as of December 31, 2016, on its OPEB plan:   Required: 
a. Compute the OPEB expense for 2016.
b. Prepare the journal entry to record the 2016 OPEB expense.

Accepted Answer

The answer of Marjorie, Inc.'s records contained the following data...

Question 5

Which of the following items attributable to a defined benefit pension plan would be recognized on a company's balance sheet?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

Question 6

GAAP requires that a company accrue the cost of other post-retirement benefits OPRBs) during the periods in which its employees earn the benefits.

Accepted Answer

A) True 
 B)False

Question 7

Which statement is false?

Accepted Answer

A)  In the computation of pension expense, a negative return on plan assets can be added. 
B)  The amount of prior service cost is not included as an asset or a liability. 
C)  Interest cost is equal to the projected benefit obligation at the end of the period multiplied by the discount rate used by the company. 
D)  A lower-than-expected mortality rate creates a pension loss to a company. 
A)  In the computation of pension expense, a negative return on plan assets can be added. 
B)  The amount of prior service cost is not included as an asset or a liability. 
C)  Interest cost is equal to the projected benefit obligation at the end of the period multiplied by the discount rate used by the company. 
D)  A lower-than-expected mortality rate creates a pension loss to a company.

Question 8

On January 1, 2015, a company had $84,000 of unrecognized prior service cost. The years-of-future-service method of amortization is used. The company has seven employees, as indicated below:   What amount of prior service cost should be included in pension expense for 2015?

Accepted Answer

A)  $2,000 
B)  $9,333 
C)  $12,000 
D)  $14,000 
A)  $2,000 
B)  $9,333 
C)  $12,000 
D)  $14,000

Question 9

What five alternatives were examined by regulators to determine which best met the recognition-measurement criteria of a liability?

Accepted Answer

1) Contribution based on an ac

Question 10

What four alternative methods for accounting for prior service cost were considered by accounting regulators?

Accepted Answer

1) Account for it prospectively
2) Recog

Question 11

In June of 2011, IASB amended IAS 19, Employee Benefits, changing its method of accounting for pensions in order to make the accounting for pensions similar under U.S. GAAP and IFRS.

Accepted Answer

A) True 
 B)False

Question 12

Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2016 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees expect to receive the increased benefits. Shown below is a schedule of the employees and their expected years of future service:  
 Required:
Using the straight-line method: 
a. Compute the average remaining service life.
b. Determine the amount of unrecognized prior service cost to be included in the 2016 pension expense calculation.

Accepted Answer

a. Average remaining service l

Question 13

In 2015, the Rachel Company initiated a defined benefit pension plan. It recorded $240,000 as pension expense and paid $280,000 to a funding agency. As a result, Rachel will report

Accepted Answer

A)  pension assets of $280,000 and pension liabilities of $240,000. 
B)  an accrued liability of $50,000. 
C)  service cost of $280,000 and unfunded prior service cost of $40,000. 
D)  prepaid pension cost of $40,000. 
A)  pension assets of $280,000 and pension liabilities of $240,000. 
B)  an accrued liability of $50,000. 
C)  service cost of $280,000 and unfunded prior service cost of $40,000. 
D)  prepaid pension cost of $40,000.

Question 14

The accumulated benefit obligation ABO) is equal to the

Accepted Answer

A)  actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using current salary levels in the pension plan formula. 
B)  actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using anticipated future salary levels in the pension plan formula. 
C)  difference between the annual pension expense and the amount actually funded during the year. 
D)  actuarial present value of benefits attributed by the pension plan formula to services rendered by employees during the current year. 
A)  actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using current salary levels in the pension plan formula. 
B)  actuarial present value of all benefits earned as of a specified date, both vested and nonvested, by employees using anticipated future salary levels in the pension plan formula. 
C)  difference between the annual pension expense and the amount actually funded during the year. 
D)  actuarial present value of benefits attributed by the pension plan formula to services rendered by employees during the current year.

Which of the following statements is true regarding a defined benefit pension plan?

Two were expected to retire at the end of 2020, two more at the end of 2022, and four at the end of 2024. Required: Using the years-of-future-service method, compute the amount of prior service cost to be amortized in the first year.

Under contributory plans the employees bear the majority of the risks of the plan and contribute towards the plan with deductions from their salaries.

Marjorie, Inc.'s records contained the following data as of December 31, 2016, on its OPEB plan: Required: a. Compute the OPEB expense for 2016. b. Prepare the journal entry to record the 2016 OPEB expense.

Which of the following items attributable to a defined benefit pension plan would be recognized on a company's balance sheet?

GAAP requires that a company accrue the cost of other post-retirement benefits OPRBs) during the periods in which its employees earn the benefits.

Which statement is false?

On January 1, 2015, a company had $84,000 of unrecognized prior service cost. The years-of-future-service method of amortization is used. The company has seven employees, as indicated below: What amount of prior service cost should be included in pension expense for 2015?

What five alternatives were examined by regulators to determine which best met the recognition-measurement criteria of a liability?

What four alternative methods for accounting for prior service cost were considered by accounting regulators?

In June of 2011, IASB amended IAS 19, Employee Benefits, changing its method of accounting for pensions in order to make the accounting for pensions similar under U.S. GAAP and IFRS.

In 2015, the Rachel Company initiated a defined benefit pension plan. It recorded $240,000 as pension expense and paid $280,000 to a funding agency. As a result, Rachel will report

The accumulated benefit obligation ABO) is equal to the

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

Filters

Exam 19: Accounting for Post-Retirement Benefits

Which of the following statements is true regarding a defined benefit pension plan?

Two were expected to retire at the end of 2020, two more at the end of 2022, and four at the end of 2024. Required: Using the years-of-future-service method, compute the amount of prior service cost to be amortized in the first year.

Under contributory plans the employees bear the majority of the risks of the plan and contribute towards the plan with deductions from their salaries.

Marjorie, Inc.'s records contained the following data as of December 31, 2016, on its OPEB plan: Required: a. Compute the OPEB expense for 2016. b. Prepare the journal entry to record the 2016 OPEB expense.

Which of the following items attributable to a defined benefit pension plan would be recognized on a company's balance sheet?

GAAP requires that a company accrue the cost of other post-retirement benefits OPRBs) during the periods in which its employees earn the benefits.

Which statement is false?

On January 1, 2015, a company had $84,000 of unrecognized prior service cost. The years-of-future-service method of amortization is used. The company has seven employees, as indicated below: What amount of prior service cost should be included in pension expense for 2015?

What five alternatives were examined by regulators to determine which best met the recognition-measurement criteria of a liability?

What four alternative methods for accounting for prior service cost were considered by accounting regulators?

In June of 2011, IASB amended IAS 19, Employee Benefits, changing its method of accounting for pensions in order to make the accounting for pensions similar under U.S. GAAP and IFRS.

In 2015, the Rachel Company initiated a defined benefit pension plan. It recorded $240,000 as pension expense and paid $280,000 to a funding agency. As a result, Rachel will report

The accumulated benefit obligation ABO) is equal to the

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Company S Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows Time Value of Money Module

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingent Obligations

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Intangibles

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Long-Term Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Understanding Time Value of Money Formulas and Concepts

Filters