Exam 14: Pensions and Postretirement Benefits

The difference between the actual and expected return on plan assets during year two is a component of comprehensive income for year two.

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 total pension expense for the year is

Prior service cost is amortized into pension expense on a straight-line basis over the remaining service lives of the employees who will be receiving benefits from the plan.

A prepaid pension asset will be created during a particular time period when a company reports pension expense of $219,200 and pension funding of $235,000.

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 pension expense for the year ended December 31,2015?

The service cost component of a defined benefit pension plan is computed as the

Smith, Inc. has a pension plan with the following data available for 2014 and 2015: 2014 2015 Service cost \ 30,000 \ 34,000 Interest cost \ 18,000 \ 20,000 Actual return on plan assets \ 15,000 \ 21,600 Beginning of year plan assets \ 200,000 \ 240,000 Settlement rate 8\% 8\% Expected return on plan assets 8\% 8\% -Smith's pension expense for 2015 is

When accounting for funded postretirement benefit plans,which one of the following is subtracted in the calculation of postretirement benefit expense?

Recognized prior service cost amortization causes reported pension expense to increase for defined benefit plans.

U.S.tax laws encourage companies to overfund their pension plans.