Exam 17: Pensions and Other Employee Future Benefits

Which statement is correct?

What is true of the interest cost component of the pension expense?

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."

Feldman has a defined benefit pension plan.The company's balance sheet shows a defined benefit liability of $770,000 at year-end.The company's records show that the company had amended the pension plan two years ago,giving rise to $600,000 of additional benefits to employees.These additional benefits vest 10 years after the plan amendment.The balance of unamortized actuarial gains at year-end is $340,000.The pension plan has $35,000,000 of assets at market value. Required: Determine the value of the accrued benefit obligation for Feldman's pension plan.

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

Carmichael Corporation has had a defined benefit pension plan for three decades.Two years ago,the company improved the benefits at a cost of $2,800,000.Pension plan assets were $84,000,000 while pension obligations were $76,000,000 at the beginning of the year.For the current year,Carmichael's pension plan incurred current service cost of $6,400,000 and interest of $8,600,000.The pension's assets earned $9,000,000,which is $400,000 below expectations.There were no actuarial gains or losses for the year. Required: a)Compute the pension expense for the year. b)Record the journal entries for Carmichael's pension plan.

Current service cost for a defined benefit pension plan amounted to $6,000,000.This pension plan's assets generated $5,500,000 of income,which exceeded expectations by $1,000,000.Pension obligations incurred interest cost of $4,500,000,which were above expectations by $200,000.During the year,the company increased benefits in the pension plan and incurred $400,000 for past service cost. Required: Compute the amount of pension expense for the year.

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

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

At the beginning of the current year,a pension has assets of $46,600,000 and accrued benefit obligation of $58,500,000.During the year,the sponsor recorded $3,100,000 in pension expense and contributed $5,000,000 to the pension plan.At the end of the year,the plan assets had fair value of $50,400,000 while the plan obligations had a present value of $60,000,000. Required: Compute the amount of other comprehensive income relating to the pension plan for the year.

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 amount will be presented on the balance sheet for fiscal 2016?

Humming Furnishings produces quality household furniture.The company has only one defined benefit pension plan,which covers its 30 carpenters.The company has completed its accounting for the year and closed its books.The draft financial statements show a defined benefit liability of $90,000.Your review of the company's records shows that the pension plan has a deficit of $250,000.The company's working papers show that $80,000 of actuarial losses remain unamortized at year-end,and $16,000 of past service cost was amortized during the year. Required: Determine the number of years that remain until employees are entitled to receive the additional benefits related to the past service cost.

Changing Assumptions Ltd.has the following details related to its defined benefit pension plan as at December 31,2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317. The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31,2019,discounted at an interest rate of 10%;i.e. ,$3,200,000 / 1.10⁶ = $1,806,317. The pension has no unamortized experience gains or losses,and no past service costs at the end of 2013.Funding during 2014 was $55,000.The actual value of pension fund assets at the end of 2014 was $2,171,000.As a result of the current services received from employees,the single payment due on December 31,2019 had increased from $3,200,000 to $3,380,000. Required: a.Compute the current service cost for 2014 and the amount of the accrued benefit obligation at December 31,2014.Perform this computation for interest rates of 8%,10%,and 12%. b.Derive the pension expense for 2014 under various assumptions about the expected return and discount rate.Complete the following table: c.Briefly comment on the different amounts of pension expense in relation to the assumptions for expected return and discount rate.How does a change in the discount rate affect the accrued benefit obligation?

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

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

A company's defined benefit pension plan incurs current service cost of $2,000,000.Expected income on the pension plan's assets amounted to $8,500,000,while actual income was $8,800,000.The interest on the pension obligation was $10,000,000,which matched the actuarial estimates.No past service costs arose during the year. Required: Compute the amount of pension expense for the year.

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

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

Which statement best explains the meaning of "current service cost"?