Question 1

A firm has a $40,000 balance in its pension liability account.This means:

Accepted Answer

A) pension expense recognized to date exceeds plan assets at fair value. 
B) accrued pension obligation is less than plan assets at fair value. 
C) pension expense recognized to date exceeds total contributions to the pension plan to date. 
D) the plan is underfunded. 
A) pension expense recognized to date exceeds plan assets at fair value. 
B) accrued pension obligation is less than plan assets at fair value. 
C) pension expense recognized to date exceeds total contributions to the pension plan to date. 
D) the plan is underfunded. C

Question 2

Jamieson's pension expense as per ASPE for Year 1 would be:

Accepted Answer

A) $40,600. 
B) $46,800. 
C) $41,400. 
D) $44,700. 
A) $40,600. 
B) $46,800. 
C) $41,400. 
D) $44,700. B

Question 3

The accrued obligation at the beginning of the year was $289,000 and the current service cost for the year is $92,000.Assuming an interest factor of 8%, what is the accrued obligation at the end of the year?

Accepted Answer

A) $381,000 
B) $404,120 
C) $403,860 
D) $363,660 
A) $381,000 
B) $404,120 
C) $403,860 
D) $363,660 B

Question 4

A change in actuarial assumptions is the only possible cause for an actuarial gain or loss.

Accepted Answer

A) True 
 B)False

Question 5

Pension plans are drafted to meet Revenue Canada requirements so that the benefits received after retirement are not subject to income tax and the contributions by the employer are not a taxable benefit to the employee.

Accepted Answer

A) True 
 B)False

Question 6

Under IFRS, net interest (finance)expense (revenue)with respect to defined benefit plans is best described as follows:

Accepted Answer

A) The actual return on plan assets must be reflected as a reduction of pension expense or as finance revenue. 
B) A discount rate is applied to the opening projected benefit obligation amount to impute an interest (finance)charge.This amount must be reflected as an increase to pension expense. 
C) The net interest (finance)expense (revenue)with respect to defined benefit plans is the difference between the opening fair values of the plan assets and accumulated benefit obligation.If the value of the accumulated benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense.If the reverse is true, will be a decrease to pension expense. 
D) The net interest (finance)expense (revenue)with respect to defined benefit plans is the difference between the opening fair values of the plan assets and projected benefit obligation.If the value of the projected benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense or finance (interest)expense.If the reverse is true, will be a decrease to pension expense or an increase to finance (interest)revenue. 
A) The actual return on plan assets must be reflected as a reduction of pension expense or as finance revenue. 
B) A discount rate is applied to the opening projected benefit obligation amount to impute an interest (finance)charge.This amount must be reflected as an increase to pension expense. 
C) The net interest (finance)expense (revenue)with respect to defined benefit plans is the difference between the opening fair values of the plan assets and accumulated benefit obligation.If the value of the accumulated benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense.If the reverse is true, will be a decrease to pension expense. 
D) The net interest (finance)expense (revenue)with respect to defined benefit plans is the difference between the opening fair values of the plan assets and projected benefit obligation.If the value of the projected benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense or finance (interest)expense.If the reverse is true, will be a decrease to pension expense or an increase to finance (interest)revenue.

Question 7

Conceptually, the employer's current pension obligation if the pension plan is discontinued is the:

Accepted Answer

A) vested benefit obligation. 
B) accumulated benefit obligation. 
C) accrued pension obligation. 
D) underfunded pension cost. 
A) vested benefit obligation. 
B) accumulated benefit obligation. 
C) accrued pension obligation. 
D) underfunded pension cost.

Question 8

The vested benefit of an employee in a pension plan represents benefits:

Accepted Answer

A) to be paid to the retired employee in the current year. 
B) to be paid to the retiring employee in the next year. 
C) accumulated in the pension plan (at fair value). 
D) that are not contingent on the employee continuing in the service of the employer. 
A) to be paid to the retired employee in the current year. 
B) to be paid to the retiring employee in the next year. 
C) accumulated in the pension plan (at fair value). 
D) that are not contingent on the employee continuing in the service of the employer.

Question 9

A trustee is independent and receives the pension contribution from the employer and invests it in accordance with provincial regulations.

Accepted Answer

A) True 
 B)False

Question 10

RST's pension plan provides retirement benefits of $8,000 per year to all employees who have worked for the company for at least 10 years.Contributions to the plan are made 75 percent by RST and 25 percent by the employees.The pension plan is characterized as both:

Accepted Answer

A) contributory and defined benefit. 
B) defined contribution and contributory. 
C) defined contribution and defined benefit. 
D) funded and defined contribution. 
A) contributory and defined benefit. 
B) defined contribution and contributory. 
C) defined contribution and defined benefit. 
D) funded and defined contribution.

Question 11

Under a defined contribution pension plan, forfeitures are estimated in advance.

Accepted Answer

A) True 
 B)False

Question 12

Pension related estimates (not funding data)are provided by the:

Accepted Answer

A) employee union. 
B) employer company. 
C) pension fund trustee. 
D) independent actuary. 
A) employee union. 
B) employer company. 
C) pension fund trustee. 
D) independent actuary.

Question 13

Past service costs that have vested must be deferred and amortized through pension expense over time, while gains or losses on plan curtailments must be immediately recognized.

Accepted Answer

A) True 
 B)False

Question 14

Jamieson's defined benefit obligation as at December 31st, Year 1 would be:

Accepted Answer

A) $44,100. 
B) $47,100. 
C) $44,700. 
D) $40,600. 
A) $44,100. 
B) $47,100. 
C) $44,700. 
D) $40,600.

Question 15

Jamieson Corp. sponsors a defined benefit plan for its employee group. The following data pertains to the plan's first 2 years in existence:

Additional information:

-	The plan was started on January 1st, Year 1, with $20,000 of funding
-	The company has a December 31st, year-end.
-	The plan is non-contributory.
-	The company's long-term debt is subject to a 6% discount rate.

-Jamieson's balance sheet as per IFRS for Year 1 would show an accumulated other comprehensive income (AOCI)balance of:

Accepted Answer

A) $2,700 dr. 
B) $3,000 dr. 
C) $3,000 cr. 
D) $2,700 cr. 
A) $2,700 dr. 
B) $3,000 dr. 
C) $3,000 cr. 
D) $2,700 cr.

Question 16

James Corp.is a publicly traded enterprise that sponsors a defined benefit pension plan for its employee group.The company has a December 31st, year-end.The plan is trusteed.
The following selected information pertaining to the plan included the following:   * Employer contributions and benefits paid to retirees both occurred evenly throughout the year.
** Resulting in additional benefits accruing to the employee group due to prior years of service.The company is subject to an 8% discount rate.
The Defined Benefit Obligation (DBO)had a fair value of $200,000 on December 31, Year 3.The Plan Assets had a fair value of $120,000 on December 31, Year 3.
Financial Statement excerpts as at January 1, Year 3 included the following:   James Corp.adjusts its funded status to reflect the fair values of its plan assets and defined benefit obligation (DBO)at the end of each fiscal year.
Required:
Part A (15 Marks): Compute the following*:
Pension Expense for Year 3.Assume that any interest revenue or expense is included within pension expense.
The funded status of the plan as at December 31, Year 3 (State whether the plan is over or under-funded as at that date.).
AOCI balance as at December 31st, Year 3.(State whether a debit or credit balance exists).
*Show all calculations.You may wish to use a spreadsheet format.Part B (5 Marks):
State which elements to your answer above would change under ASPE, both in terms of measurement and in terms of presentation.For this part only, ignore any opening AOCI balances.Be specific.

Accepted Answer

The answer of James Corp.is a publicly traded enterprise that...

Question 17

How does a trustee impact upon accounting for defined pension plans?

Accepted Answer

A trustee is independent and receives th

Question 18

All of the following are relevant policy disclosures suggested by the AcSB except:

Accepted Answer

A) changes to reserves and other comprehensive income if any. 
B) a reconciliation of the defined benefit obligation from the beginning to the end of the year. 
C) amount of pension expense for the period, broken down by component. 
D) a reconciliation of relevant pension amounts. 
E) the number of employees. 
A) changes to reserves and other comprehensive income if any. 
B) a reconciliation of the defined benefit obligation from the beginning to the end of the year. 
C) amount of pension expense for the period, broken down by component. 
D) a reconciliation of relevant pension amounts. 
E) the number of employees.

Question 19

Jamieson's defined benefit obligation as at December 31st, Year 2 would be:

Accepted Answer

A) $58,526. 
B) $50,526. 
C) $54,526. 
D) $46,526. 
A) $58,526. 
B) $50,526. 
C) $54,526. 
D) $46,526.

Question 20

Current service cost is usually the largest single component of pension expense under a defined benefit pension plan.

Accepted Answer

A) True 
 B)False

A firm has a $40,000 balance in its pension liability account.This means:

Jamieson's pension expense as per ASPE for Year 1 would be:

The accrued obligation at the beginning of the year was $289,000 and the current service cost for the year is $92,000.Assuming an interest factor of 8%, what is the accrued obligation at the end of the year?

A change in actuarial assumptions is the only possible cause for an actuarial gain or loss.

Pension plans are drafted to meet Revenue Canada requirements so that the benefits received after retirement are not subject to income tax and the contributions by the employer are not a taxable benefit to the employee.

Under IFRS, net interest (finance)expense (revenue)with respect to defined benefit plans is best described as follows:

Conceptually, the employer's current pension obligation if the pension plan is discontinued is the:

The vested benefit of an employee in a pension plan represents benefits:

A trustee is independent and receives the pension contribution from the employer and invests it in accordance with provincial regulations.

RST's pension plan provides retirement benefits of $8,000 per year to all employees who have worked for the company for at least 10 years.Contributions to the plan are made 75 percent by RST and 25 percent by the employees.The pension plan is characterized as both:

Under a defined contribution pension plan, forfeitures are estimated in advance.

Pension related estimates (not funding data)are provided by the:

Past service costs that have vested must be deferred and amortized through pension expense over time, while gains or losses on plan curtailments must be immediately recognized.

Jamieson's defined benefit obligation as at December 31st, Year 1 would be:

How does a trustee impact upon accounting for defined pension plans?

All of the following are relevant policy disclosures suggested by the AcSB except:

Jamieson's defined benefit obligation as at December 31st, Year 2 would be:

Current service cost is usually the largest single component of pension expense under a defined benefit pension plan.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters

Exam 19: Post-Employment Benefits

A firm has a $40,000 balance in its pension liability account.This means:

Jamieson's pension expense as per ASPE for Year 1 would be:

The accrued obligation at the beginning of the year was $289,000 and the current service cost for the year is $92,000.Assuming an interest factor of 8%, what is the accrued obligation at the end of the year?

A change in actuarial assumptions is the only possible cause for an actuarial gain or loss.

Pension plans are drafted to meet Revenue Canada requirements so that the benefits received after retirement are not subject to income tax and the contributions by the employer are not a taxable benefit to the employee.

Under IFRS, net interest (finance)expense (revenue)with respect to defined benefit plans is best described as follows:

Conceptually, the employer's current pension obligation if the pension plan is discontinued is the:

The vested benefit of an employee in a pension plan represents benefits:

A trustee is independent and receives the pension contribution from the employer and invests it in accordance with provincial regulations.

RST's pension plan provides retirement benefits of $8,000 per year to all employees who have worked for the company for at least 10 years.Contributions to the plan are made 75 percent by RST and 25 percent by the employees.The pension plan is characterized as both:

Under a defined contribution pension plan, forfeitures are estimated in advance.

Pension related estimates (not funding data)are provided by the:

Past service costs that have vested must be deferred and amortized through pension expense over time, while gains or losses on plan curtailments must be immediately recognized.

Jamieson's defined benefit obligation as at December 31st, Year 1 would be:

How does a trustee impact upon accounting for defined pension plans?

All of the following are relevant policy disclosures suggested by the AcSB except:

Jamieson's defined benefit obligation as at December 31st, Year 2 would be:

Current service cost is usually the largest single component of pension expense under a defined benefit pension plan.

Financial Liabilities and Provisions

Financial Instruments: Long-Term Debt

Shareholders Equity

Financial Instruments: Complex Debt and Equity

Corporate Income Tax

Tax Losses

Leases

Earnings Per Share

Accounting Changes

Financial Statement Analysis

Filters