Exam 7: Pensions and Other Employee Future Benefits

Dunder Mae Products has a defined contribution pension plan for its employees.The plan requires the company to contribute 8% of these employees' salaries to the pension.In 2016,total salary for employees covered by the pension plan totalled $70 million,of which 85% is attributable to employees involved in manufacturing while the remaining 15% of salaries relate to administrative staff.The company contributed $3 million to the pension during the year. Required: Provide the summary journal entry for Dunder Mae's pension plan for 2016.

Prepare the Summarized Pension Trustee's Report on Pension Plan Assets (without numbers)in good form.

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.

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

Othello Steel provides a defined benefit pension plan for its employees.One of its employees,Ginger Philips,who just turned 45 years old,expects to retire at age 70.At that time,the pension plan will pay Ginger annual pension payments equal to 10% of her final year's salary for each year of services rendered.The pension payments will continue until Ginger's death,which actuaries expect to be when she turns 95 years old.Ginger is currently earning $75,000 per year,and this rate is not expected to increase due to the poor state of the steel industry.Orion Steel uses a 6 % interest rate for its pension obligations. Required: Determine the current service cost for Ginger Philips's pension for the past year (the year just before she turned 45).

What is true about actuarial gains and losses?

Discuss why accounting for "defined benefit plans" is so complex and the types of estimates required.

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

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:

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

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:

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

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."

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.

A company has a defined benefit pension asset of $1,050,000 at the end 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 the beginning of the year.

A company has a defined benefit pension asset of $1,300,000 at the beginning of the year.The company contributes $4,000,000 to the pension during the year and records a pension expense of $6,200,000.The closing balance of the defined benefit pension plan at year-end is therefore a:

Masons' balance sheet shows a defined benefit asset of $740,000.Records show that there are $89,000 of past service costs and $610,000 of actuarial losses that remain unamortized. Required: Using the pension reconciliation required in the company's note disclosures,determine the pension plan's surplus or deficit.

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