Exam 14: Pensions and Postretirement Benefits

Companies are required to disclose their estimate of pension funding for the upcoming year.

A company contributes to its defined contribution plan.Which one of the following journal entries properly records this transaction?

TKE Corporation established a defined benefit pension plan in 2012. TKE has provided the following information for the year ended December 31, 2014: Service cost \ 90,000 Interest cost \ 120,000 Actual return on plan assets \ 70,000 Expected return on plan assets \ 80,000 Amortization of prior service costs \ 30,000 -If the company contributes $160,000 cash to the pension plan trustee,which one of the following journal entries properly records the payment?

The trustee for the Bronson Corporation pension sent a report to the CEO with the following information for the fiscal year: Beginning balance of plan assets at fair value \ 1,560,000 Actual return on plan assets \ 210,000 Employer's contribution \ 150,000 Distributions to retirees \ 75,000 Service cost \ 125,000 Interest cost I \ 156,000 Loss from changes in benefits or assumptions \ 35,000 Beginning balance of the PBO \ 1,580,000 -The ending balance of plan assets is

Which of the following is not a factor in the determination of pension expense when the employer sponsors a defined benefit pension plan?

To compute the amortization of the cumulative unrecognized gains and losses in a pension plan,the corridor is computed as 10% of the higher of market-related value of pension plan assets or the projected benefit obligation.

The Boulder Rock Company has provided the following information pertaining to its defined benefit plan: • The projected benefit obligation was $2,100,000 on January 1,2015. • Recognition of prior service cost during 2015 was $150,000. • Service cost for 2015 was $300,000. • Plan assets on January 1,2015 totaled $1,500,000. • The expected return on plan assets was 10%. • The actual return on plan assets was 8%. • The settlement/discount rate was 8%. • The December 31,2015 contribution to the plan asset fund was $450,000. • Benefits paid to retirees during 2015 totaled $225,000. Required: 1.Determine Boulder's pension expense for 2015. 2.Determine the projected benefit obligation (PBO)as of December 31,2015. 3.Prepare the journal entry to record pension expense and the funding for the year ended December 31,2015. 4.Determine the balance of the pension plan assets. 5.What should be reported on the December 31,2015 balance sheet with respect to the funded status of the defined benefit pension plan?

IFRS permits two methods for handling actuarial gains and losses,one of which requires immediate recognition of actuarial gains and losses in pension expense.

If the fair value of the plan assets is $260,000 at the beginning of 2015,the beginning of the year projected benefit obligation is $250,000,the cumulative unrecognized gains are $30,000 at the beginning of 2014 and $28,250 at the beginning of 2015,and the average remaining service period of active employees is 10 years,then the amortization of accumulated unrecognized gains for 2015 is

The same interest rate is used to compute service cost,interest cost,and return on plan assets.

Pona, Inc. has a defined benefit pension plan for its employees. The plan assets and projected benefit obligation at the beginning of the year were $608,000. The accumulated benefit obligation at the beginning of the year was $456,000. The expected return on plan assets was 8% while the actual return was 9%. The service cost for the year was $130,841. The actuarially assumed discount rate was 7% and amortization of prior service costs was $17,750. -The interest cost for the year is

Under IFRS,pension expense is likely to be both more volatile and lower compared to pension expense computed under U.S.GAAP.

The Carrasco Company has provided you the following information pertaining to its defined benefit pension plan that was adopted on January 1, 2014: • The service cost was $750,000 during 2014 and $1,125,000 during 2015. • The contribution to the pension plan was $600,000 on December 31, 2014 and $1,200,000 on December 31, 2015. • The actuarially determined discount rate and the expected return on plan assets are both 10%. • The actual return on plan assets was 10.5%. • Retirement benefits pertaining to years of service prior to 2014 were not granted to the employees. -What is the pension plan fund balance as of December 31,2015?

Under current GAAP,volatility in asset returns translates directly into net income volatility because the return on plan assets reduces pension expense.

TKE Corporation established a defined benefit pension plan in 2012. TKE has provided the following information for the year ended December 31, 2014: Service cost \ 90,000 Interest cost \ 120,000 Actual return on plan assets \ 70,000 Expected return on plan assets \ 80,000 Amortization of prior service costs \ 30,000 -If the company contributes $170,000 cash to the pension plan trustee,which one of the following journal entries properly records the payment?

Most of the factors used to determine specific expense accruals for defined benefit pension plans are based upon actuarial assumptions and present values.

The Canton Corporation's December 31,2014 balance sheet reports a pension asset of $397,500.On December 31,2014,the projected benefit obligation was $6,479,000,the fair value of the plan assets was $6,747,000,and the accumulated benefit obligation was $3,482,500.The December 31,2014 balance sheet should report

The Marino Company has provided you the following information pertaining to its defined benefit pension plan that was adopted on January 1, 2014: • The service cost was $950,000 during 2014 and $1,045,000 during 2015. • The prior service cost amortization each year was $290,000. • The contribution to the pension plan was $1,500,000 on December 31, 2014 and $1,800,000 on December 31, 2015. • The actuarially determined discount rate and the expected return on plan assets was 10%. • The actual return on plan assets was 9.5%. • Retirement benefits pertaining to years of service prior to 2014 were granted to the employees. The prior service cost is being amortized over the remaining ten-year life of the employees. -What is the projected benefit obligation as of December 31,2015?

Which of the following is not a similarity between the accounting for a defined benefit pension plan and other postretirement benefits?

Which of the following statements is not correct?