Question 1

What amount is included in the pension reconciliation for the income statement?

Accepted Answer

A) Fair value of plan assets. 
B) Pension expense. 
C) Benefit paid. 
D) Contributions paid. 
A) Fair value of plan assets. 
B) Pension expense. 
C) Benefit paid. 
D) Contributions paid.

Question 2

A company has a defined benefit pension liability of $1,050,000 at the beginning of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.
Required:
Determine the value of the defined benefit pension liability at year-end.

Accepted Answer

The summary journal

Question 3

A company has a defined benefit pension liability of $4,700,000 at the beginning of the year. The company contributes $7,000,000 to the pension during the year and records a pension expense of $10,200,000. The closing balance of the defined benefit pension plan at year-end is therefore a:

Accepted Answer

A) $7,900,000 liability 
B) $7,900,000 asset 
C) $11,700,000 liability 
D) $1,500,000 asset 
A) $7,900,000 liability 
B) $7,900,000 asset 
C) $11,700,000 liability 
D) $1,500,000 asset

Question 4

Which statement explains the risk involved in "defined contribution plans"?

Accepted Answer

A) Poor returns on the pension investments reduce the benefits for future retirees. 
B) High returns on the pension investments increase the benefit payments for the employer. 
C) The plan specifies the fixed benefits that future retirees will receive. 
D) The plan provides benefits to future retirees depending on their years of service. 
A) Poor returns on the pension investments reduce the benefits for future retirees. 
B) High returns on the pension investments increase the benefit payments for the employer. 
C) The plan specifies the fixed benefits that future retirees will receive. 
D) The plan provides benefits to future retirees depending on their years of service.

Question 5

In pension accounting, how are past service costs accounted for under ASPE?

Accepted Answer

A) Recognized in the balance sheet as a liability for the full amount. 
B) Recognized in the income statement as an expense for the full amount. 
C) Not recognized, but disclosed in a note. 
D) Included as part of pension expense and may be amortized over a specified period. 
A) Recognized in the balance sheet as a liability for the full amount. 
B) Recognized in the income statement as an expense for the full amount. 
C) Not recognized, but disclosed in a note. 
D) Included as part of pension expense and may be amortized over a specified period.

Question 6

Orion Steel provides a defined benefit pension plan for its employees. One of its employees, Gail Camden, who just turned 45 years old, expects to retire at age 65. At that time, the pension plan will pay Gail annual pension payments equal to 5% of her final year's salary for each year of services rendered by Gail. The pension payments will continue until Gail's death, which actuaries expect to be when she turns 95 years old. Gail is currently earning $35,000 per year, and this rate is not expected to increase due to the poor state of the steel industry. Orion Steel uses an 8 % interest rate for its pension obligations.
Required:
Determine the current service cost for Gail Camden's pension for the past year (the year just before she turned 45).

Accepted Answer

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

Question 7

Which of the following component refers to the benefits earned by employees in a defined benefit plan?

Accepted Answer

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

Question 8

Explain the accounting for defined contribution plans and also discuss why it is straightforward.

Accepted Answer

When a company uses a defined contributi

Question 9

What is the key distinction between amounts recorded through income as pension expense versus amounts recorded through OCI?

Accepted Answer

The key distinction between amounts reco

Question 10

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

Accepted Answer

A) High returns in the pension plan result in higher benefit payments to the employees in the future. 
B) A pension plan that specifies how much funds the employee needs to contribute. 
C) A plan that requires the employer to contribute $10 per hour worked by an employee. 
D) A plan that specifies how much in pension payments employees will receive in their retirement. 
A) High returns in the pension plan result in higher benefit payments to the employees in the future. 
B) A pension plan that specifies how much funds the employee needs to contribute. 
C) A plan that requires the employer to contribute $10 per hour worked by an employee. 
D) A plan that specifies how much in pension payments employees will receive in their retirement.

Question 11

A company has a defined benefit pension liability 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 summary journal entry recorded for t

Question 12

What are actuarial losses or gains in a defined benefit plan?

Accepted Answer

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

Question 13

Current service cost for a defined benefit pension plan amounted to $1,000,000. Expected income on the pension plan's assets amounted to $7,500,000, while actual income was $7,800,000. The interest on the pension obligation was $9,000,000, which matched the actuarial estimates. No past service costs arose during the year. Given this information the pension expense for the year was:

Accepted Answer

A) $500,000 
B) $2,200,000 
C) $2,500,000 
D) $1,000,000 
A) $500,000 
B) $2,200,000 
C) $2,500,000 
D) $1,000,000

Question 14

A pension plan promises to pay $75,000 at the end of each year 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 9% and a retirement period of 30 years; or
b. discount rate of 9% and a retirement period of 40 years.

Accepted Answer

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

Question 15

What four accounts are affected by the accounting for a defined benefit pension plan?

Accepted Answer

A) Cash, pension expense, OCI, and the defined benefit asset or liability. 
B) Expected gains and losses, cash, income, pension expense. 
C) Pension liability, pension expense, cash, income. 
D) Pension expense, pension assets, pension liability, cash. 
A) Cash, pension expense, OCI, and the defined benefit asset or liability. 
B) Expected gains and losses, cash, income, pension expense. 
C) Pension liability, pension expense, cash, income. 
D) Pension expense, pension assets, pension liability, cash.

Question 16

Summarize the three steps in the accounting for defined benefit pension plans.

Accepted Answer

Step 1: The first establishes the fair v

Question 17

A company reported $430,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $29,000 over the year.
Required:
How much cash was paid to the pension trustee during the period?

Accepted Answer

The answer of A company reported $430,000 of pension expense...

Question 18

What is the total pension expense for the following plan after 10 years? "The company must contribute $100/year for each of its 500 employees. The plan hopes to accumulate enough funds so that each retiree receives $10,000 in the future; the plan does not guarantee the investment returns to the employees."

Accepted Answer

A) $1,000 
B) $100,000 
C) $500,000 
D) $5,000,000 
A) $1,000 
B) $100,000 
C) $500,000 
D) $5,000,000

Question 19

What is the key objective in the accounting for defined benefit plans that is achieved by estimating and recording current service cost?

Accepted Answer

Estimating and recording current service

Question 20

A company has a defined benefit pension liability of $3,750,000 at the end of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.
Required:
Determine the value of the defined benefit pension liability at the beginning of the year.

Accepted Answer

The summary journal

What amount is included in the pension reconciliation for the income statement?

A company has a defined benefit pension liability of $1,050,000 at the beginning of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

A company has a defined benefit pension liability of $4,700,000 at the beginning of the year. The company contributes $7,000,000 to the pension during the year and records a pension expense of $10,200,000. The closing balance of the defined benefit pension plan at year-end is therefore a:

Which statement explains the risk involved in "defined contribution plans"?

In pension accounting, how are past service costs accounted for under ASPE?

Which of the following component refers to the benefits earned by employees in a defined benefit plan?

Explain the accounting for defined contribution plans and also discuss why it is straightforward.

What is the key distinction between amounts recorded through income as pension expense versus amounts recorded through OCI?

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

A company has a defined benefit pension liability 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.

What are actuarial losses or gains in a defined benefit plan?

What four accounts are affected by the accounting for a defined benefit pension plan?

Summarize the three steps in the accounting for defined benefit pension plans.

A company reported $430,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $29,000 over the year. Required: How much cash was paid to the pension trustee during the period?

What is the key objective in the accounting for defined benefit plans that is achieved by estimating and recording current service cost?

A company has a defined benefit pension liability of $3,750,000 at the end of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000. Required: Determine the value of the defined benefit pension liability at the beginning of the year.

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 amount is included in the pension reconciliation for the income statement?

A company has a defined benefit pension liability of $1,050,000 at the beginning of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000. Required: Determine the value of the defined benefit pension liability at year-end.

A company has a defined benefit pension liability of $4,700,000 at the beginning of the year. The company contributes $7,000,000 to the pension during the year and records a pension expense of $10,200,000. The closing balance of the defined benefit pension plan at year-end is therefore a:

Which statement explains the risk involved in "defined contribution plans"?

In pension accounting, how are past service costs accounted for under ASPE?

Which of the following component refers to the benefits earned by employees in a defined benefit plan?

Explain the accounting for defined contribution plans and also discuss why it is straightforward.

What is the key distinction between amounts recorded through income as pension expense versus amounts recorded through OCI?

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

A company has a defined benefit pension liability 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.

What are actuarial losses or gains in a defined benefit plan?

What four accounts are affected by the accounting for a defined benefit pension plan?

Summarize the three steps in the accounting for defined benefit pension plans.

A company reported $430,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $29,000 over the year. Required: How much cash was paid to the pension trustee during the period?

What is the key objective in the accounting for defined benefit plans that is achieved by estimating and recording current service cost?

A company has a defined benefit pension liability of $3,750,000 at the end of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000. Required: Determine the value of the defined benefit pension liability at the beginning of the year.

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