Question 1

What is an actuarial gain?

Accepted Answer

A) An unfavourable difference between actual and expected amounts for pension obligations. 
B) A favourable difference between actual and expected amounts for pension plan obligations. 
C) An unfavourable difference between actual and expected amounts for pension contributions. 
D) A favourable difference between actual and expected amounts for pension contributions. 
A) An unfavourable difference between actual and expected amounts for pension obligations. 
B) A favourable difference between actual and expected amounts for pension plan obligations. 
C) An unfavourable difference between actual and expected amounts for pension contributions. 
D) A favourable difference between actual and expected amounts for pension contributions.

Question 2

A company has a defined benefit pension asset of $1,050,000 at the end of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000.
Required:
Determine the value of the defined benefit pension liability at the beginning of the year.

Accepted Answer

The summary journal

Question 3

A company reported $350,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $20,000 over the year. How much cash was paid to the pension trustee during the period?

Accepted Answer

A) $320,000 
B) $330,000 
C) $350,000 
D) $370,000 
A) $320,000 
B) $330,000 
C) $350,000 
D) $370,000

Question 4

What is true about actuarial gains and losses?

Accepted Answer

A) These gains and losses are caused by actuarial miscalculations. 
B) IFRS requires actuarial gains and losses to be recorded through the income statement. 
C) IFRS requires actuarial gains and losses to be recorded through OCI without recycling through the income statement. 
D) IFRS requires actuarial gains and losses not to be reported as they will reverse themselves over such a long time horizon. 
A) These gains and losses are caused by actuarial miscalculations. 
B) IFRS requires actuarial gains and losses to be recorded through the income statement. 
C) IFRS requires actuarial gains and losses to be recorded through OCI without recycling through the income statement. 
D) IFRS requires actuarial gains and losses not to be reported as they will reverse themselves over such a long time horizon.

Question 5

What are past service costs in a defined benefit plan?

Accepted Answer

A) Plan amendments that retrospectively improve pension plan benefits. 
B) Difference arising between the actual and the expected value of plan assets. 
C) Expected interest, dividend or income earned on the pension plan assets. 
D) Differences arising between the actual and expected values of the pension obligations. 
A) Plan amendments that retrospectively improve pension plan benefits. 
B) Difference arising between the actual and the expected value of plan assets. 
C) Expected interest, dividend or income earned on the pension plan assets. 
D) Differences arising between the actual and expected values of the pension obligations.

Question 6

Peter is currently 30 years old and he plans to retire early, in 20 years' time. He would like to have an income of $50,000 per year during his retirement, which he anticipates will last for another 40 years. Assume that Peter receives the retirement income at the end of each of the 40 years.
Required:
Determine the amount of money Peter will need to have accumulated by the time he starts his retirement. Assume a discount rate of 9%.

Accepted Answer

The answer of Peter is currently 30 years old and...

Question 7

What is an actuarial loss?

Accepted Answer

A) An unfavourable difference between actual and expected amounts for pension plan obligations. 
B) A favourable difference between actual and expected amounts for pension assets. 
C) An unfavourable difference between actual and expected amounts for pension contributions. 
D) A favourable difference between actual and expected amounts for pension obligations. 
A) An unfavourable difference between actual and expected amounts for pension plan obligations. 
B) A favourable difference between actual and expected amounts for pension assets. 
C) An unfavourable difference between actual and expected amounts for pension contributions. 
D) A favourable difference between actual and expected amounts for pension obligations.

Question 8

What is the fundamental difference between a defined contribution and a defined benefit pension plan?

Accepted Answer

The fundamental difference between a def

Question 9

A pension plan promises to pay $75,000 at the end of each year for 25 years of the retirement period.
Required:
Compute the funds required to fund this pension plan at the start of the retirement period assuming:
a. discount rate of 5%; or
b. discount rate of 4%.

Accepted Answer

The answer of A pension plan promises to pay $75,000...

Question 10

A company has a defined benefit pension asset of $750,000 at the beginning of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000.
Required:
Determine the value of the defined benefit pension liability at year-end.

Accepted Answer

The answer of A company has a defined benefit pension...

Question 11

Why does IAS 19 require Recognizing changes in the fair value of pension assets and liabilities to flow through OCI and not through the income statement?

Accepted Answer

Allowing pension gains or losses to flow

Question 12

Wags Inc Company sponsors a defined contribution pension plan for its employees. The plan specifies that the company will match the amount each employee contributes to the plan. Employees are eligible to contribute up to 10% of their salary to the pension plan. During 2020, employees covered by the pension plan earned salaries totalling $30 million. Employee contributions to the pension totalled $3 million. Wags Inc contributed $2 million to the plan during the year.
Required:
Provide the summary journal entry for Wags Inc's pension plan for 2020.

Accepted Answer

The answer of Wags Inc Company sponsors a defined contribution...

Question 13

Othello Steel provides a defined benefit pension plan for its employees. One of its employees, Ginger Philips, who just turned 45 years old, expects to retire at age 70. At that time, the pension plan will pay Ginger annual pension payments equal to 10% of her final year's salary for each year of services rendered. The pension payments will continue until Ginger's death, which actuaries expect to be when she turns 95 years old. Ginger is currently earning $75,000 per year, and this rate is not expected to increase due to the poor state of the steel industry. Orion Steel uses a 6 % interest rate for its pension obligations.
Required:
Determine the current service cost for Ginger Philips's pension for the past year (the year just before she turned 45).

Accepted Answer

The answer of Othello Steel provides a defined benefit pension...

Question 14

Which statement about "defined contribution plans" is correct?

Accepted Answer

A) Pension expense equals the contributions made based on the plan formula. 
B) Pension expense equals the present value of the future benefits to be paid to the retiree. 
C) Pension cost cannot be capitalized to the cost of inventory. 
D) Pension cost may not be capitalized to the construction cost of property, plant and equipment. 
A) Pension expense equals the contributions made based on the plan formula. 
B) Pension expense equals the present value of the future benefits to be paid to the retiree. 
C) Pension cost cannot be capitalized to the cost of inventory. 
D) Pension cost may not be capitalized to the construction cost of property, plant and equipment.

Question 15

What is the total pension expense for the following plan after 5 years? "The plan requires the company to contribute $500 for each of its 1,000 employees. The plan hopes to accumulate enough funds so that each retiree receives $20,000 in the future; the company has no obligation to guarantee the investment returns."

Accepted Answer

A) $2,500 
B) $100,000 
C) $2,500,000 
D) $20,000,000 
A) $2,500 
B) $100,000 
C) $2,500,000 
D) $20,000,000

Question 16

Regarding the presentation and disclosure of pension plans, which statement is true?

Accepted Answer

A) Enterprises must disclose the components of pension gains. 
B) If the pension expense, OCI, and the defined benefit asset or liability are not separately identified on the face of the financial statements, they must be disclosed in the notes. 
C) When a company has more than one defined benefit plan, IFRS usually permits the company to offset pension asset and pension liability amounts. 
D) Two plans that both have net liability positions cannot be added together. 
A) Enterprises must disclose the components of pension gains. 
B) If the pension expense, OCI, and the defined benefit asset or liability are not separately identified on the face of the financial statements, they must be disclosed in the notes. 
C) When a company has more than one defined benefit plan, IFRS usually permits the company to offset pension asset and pension liability amounts. 
D) Two plans that both have net liability positions cannot be added together.

Question 17

Dunder Mae Products has a defined contribution pension plan for its employees. The plan requires the company to contribute 8% of these employees' salaries to the pension. In 2019, total salary for employees covered by the pension plan totalled $70 million, of which 85% is attributable to employees involved in manufacturing while the remaining 15% of salaries relate to administrative staff. The company contributed $3 million to the pension during the year.
Required:
Provide the summary journal entry for Dunder Mae's pension plan for 2019.

Accepted Answer

The answer of Dunder Mae Products has a defined contribution...

Question 18

Which of the following components does not relate to the assets/liabilities held in the pension trust for a defined benefit plan?

Accepted Answer

A) Interest cost on pension obligations. 
B) Income from plan assets. 
C) Amortization of actuarial gains and losses. 
D) Amortization of past service cost. 
A) Interest cost on pension obligations. 
B) Income from plan assets. 
C) Amortization of actuarial gains and losses. 
D) Amortization of past service cost.

Question 19

Which of the following best describes a "defined contribution plan"?

Accepted Answer

A) A pension plan where the employer can reduce its contributions if it is overfunded. 
B) A pension plan that place investment risk on the employees. 
C) A pension plan that place investment risk on the employers. 
D) A pension plan where the employee can decrease its contributions if it is overfunded. 
A) A pension plan where the employer can reduce its contributions if it is overfunded. 
B) A pension plan that place investment risk on the employees. 
C) A pension plan that place investment risk on the employers. 
D) A pension plan where the employee can decrease its contributions if it is overfunded.

Question 20

What amount is included in the pension reconciliation for the balance sheet?

Accepted Answer

A) Current service cost. 
B) Pension plan assets. 
C) Benefit paid. 
D) Contributions paid. 
A) Current service cost. 
B) Pension plan assets. 
C) Benefit paid. 
D) Contributions paid.

What is an actuarial gain?

A company has a defined benefit pension asset of $1,050,000 at the end of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at the beginning of the year.

A company reported $350,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $20,000 over the year. How much cash was paid to the pension trustee during the period?

What is true about actuarial gains and losses?

What are past service costs in a defined benefit plan?

What is an actuarial loss?

What is the fundamental difference between a defined contribution and a defined benefit pension plan?

A pension plan promises to pay $75,000 at the end of each year for 25 years of the retirement period. Required: Compute the funds required to fund this pension plan at the start of the retirement period assuming: a. discount rate of 5%; or b. discount rate of 4%.

A company has a defined benefit pension asset of $750,000 at the beginning of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

Why does IAS 19 require Recognizing changes in the fair value of pension assets and liabilities to flow through OCI and not through the income statement?

Which statement about "defined contribution plans" is correct?

Regarding the presentation and disclosure of pension plans, which statement is true?

Which of the following components does not relate to the assets/liabilities held in the pension trust for a defined benefit plan?

Which of the following best describes a "defined contribution plan"?

What amount is included in the pension reconciliation for the balance sheet?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters

Exam 6: Pensions and Other Employee Future Benefits

What is an actuarial gain?

A company has a defined benefit pension asset of $1,050,000 at the end of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at the beginning of the year.

A company reported $350,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $20,000 over the year. How much cash was paid to the pension trustee during the period?

What is true about actuarial gains and losses?

What are past service costs in a defined benefit plan?

What is an actuarial loss?

What is the fundamental difference between a defined contribution and a defined benefit pension plan?

A pension plan promises to pay $75,000 at the end of each year for 25 years of the retirement period. Required: Compute the funds required to fund this pension plan at the start of the retirement period assuming: a. discount rate of 5%; or b. discount rate of 4%.

A company has a defined benefit pension asset of $750,000 at the beginning of the year. The company contributes $2,500,000 to the pension during the year and records a pension expense of $2,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

Why does IAS 19 require Recognizing changes in the fair value of pension assets and liabilities to flow through OCI and not through the income statement?

Which statement about "defined contribution plans" is correct?

Regarding the presentation and disclosure of pension plans, which statement is true?

Which of the following components does not relate to the assets/liabilities held in the pension trust for a defined benefit plan?

Which of the following best describes a "defined contribution plan"?

What amount is included in the pension reconciliation for the balance sheet?

Current Liabilities and Contingencies

Non-Current Financial Liabilities

Equities

Complex Financial Instruments

Earnings Per Share

Accounting for Leases

Accounting for Income Taxes

Accounting Changes

Statement of Cash Flows

Filters