Question 1

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

Accepted Answer

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

Question 2

On January 1,2014,the Bombay Corp.amended its defined benefit pension plan to provide increased retirement benefits for its 150 employees covered by the plan on that date.As a result of the plan amendment,the projected benefit obligation as of January 1,2014,increased by $1,275,000.Management decided to amortize this amount on a straight-line basis over the average remaining service life of the 150 employees.It is assumed that employees will retire at the rate of six employees per year over the next 25 years.The prior service cost is to be funded with equal annual contributions over a ten-year period.The first contribution is due at the end of 2014 and the assumed interest rate for funding purposes is 12 percent.The present value factor for an ordinary annuity for ten periods at 12 percent is 5.6502.
(1)Compute the annual amount of amortization of prior service cost.
(2)Compute the amount of the annual contribution required to fund the prior service cost.(Round computation to the nearest dollar.)(3)Assume that pension cost for 2014 excluding prior service cost amounted to $120,000 and Bombay's contributions to the pension fund totaled $110,000 in addition to the funding of prior service cost.Prepare a summary journal entry to record all pension-related amounts for 2014.

Accepted Answer

(1)   Average remaining service life = 1,950/150 = 13 years
Annual amortization of prior service cost: $1,275,000/13 = $98,077 (rounded)(2)Annual funding of prior service cost: $1,275,000/5.6502 = $225,656 (rounded)(3)

Question 3

The following information relates to the defined benefit pension plan of the Steamer Company for the year ending December 31,2014:
 
The net periodic pension cost reported in the income statement for 2014 would be

Accepted Answer

A) $11,500. 
B) $24,000. 
C) $36,500. 
D) $59,000. 
A) $11,500. 
B) $24,000. 
C) $36,500. 
D) $59,000. C

Question 4

If the actual return on pension fund assets exceeds the expected return for the period,the difference is

Accepted Answer

A) a deferred loss. 
B) a deferred gain. 
C) recognized as a loss in the current period. 
D) recognized as a gain in the current period. 
A) a deferred loss. 
B) a deferred gain. 
C) recognized as a loss in the current period. 
D) recognized as a gain in the current period.

Question 5

Vinny,Inc.has an incentive compensation plan under which the sales manager receives a bonus equal to 10 percent of the company's income after deductions for bonus and income taxes.Income before bonus and income taxes is $400,000.The effective income tax rate is 30 percent.How much is the bonus (rounded to the nearest dollar)?

Accepted Answer

A) $40,000 
B) $30,108 
C) $28,000 
D) $26,168 
A) $40,000 
B) $30,108 
C) $28,000 
D) $26,168

Question 6

Which of the following concepts for postretirement benefit plans is comparable to the projected benefit obligation (PBO)of pension plans?

Accepted Answer

A) Accumulated Postretirement Benefit Obligation (APBO) 
B) Expected Postretirement Benefit Obligation (EPBO) 
C) Actual return on plan assets 
D) Expected return on plan assets 
A) Accumulated Postretirement Benefit Obligation (APBO) 
B) Expected Postretirement Benefit Obligation (EPBO) 
C) Actual return on plan assets 
D) Expected return on plan assets

Question 7

On August 31,2014,payroll data from the records of Astroland Enterprises showed:
   
Provide the entries necessary to:
(1)Record the payment of the payroll on August 31,2014.
(2)Record the employer's payroll tax liabilities.(The federal unemployment tax rate is 0.8 percent; the state unemployment tax rate is 5.4 percent.)

Accepted Answer

@#IMG-DLM& To record

Question 8

The following information relates to the defined benefit pension plan for the Moldor Company for the year ending December 31, 2014.
  
-Using the information above,the actual return on plan assets for the year is

Accepted Answer

A) $105,000. 
B) $495,000. 
C) $503,500. 
D) $530,000. 
A) $105,000. 
B) $495,000. 
C) $503,500. 
D) $530,000.

Question 9

Which of the following statements characterizes defined contribution plans?

Accepted Answer

A) They are more complex in construction than defined benefit plans. 
B) The employer's obligation is satisfied by making the appropriate amount of periodic contribution. 
C) The investment risk is borne by the employer. 
D) Contributions are made in equal amounts by employer and employees. 
A) They are more complex in construction than defined benefit plans. 
B) The employer's obligation is satisfied by making the appropriate amount of periodic contribution. 
C) The investment risk is borne by the employer. 
D) Contributions are made in equal amounts by employer and employees.

Question 10

Vast Ocean Corporation has an incentive compensation plan under which the sales manager receives a bonus equal to 10% of the company's income after deducting income taxes but before deducting the bonus.Income before income tax and the bonus is $80,000.The effective income tax rate is 40%.How much is the bonus?

Accepted Answer

A) $8,000 
B) $5,000 
C) $4,800 
D) $4,320 
A) $8,000 
B) $5,000 
C) $4,800 
D) $4,320

Question 11

Which of the following criteria is not required for the recognition of a liability for compensated absences under FASB ASC Topic 710?

Accepted Answer

A) The amount of the obligation must be estimable. 
B) Payment of the obligation must be probable. 
C) Payment of the obligation will require the use of current assets. 
D) The compensation either vests with the employee or can be carried forward to subsequent years. 
A) The amount of the obligation must be estimable. 
B) Payment of the obligation must be probable. 
C) Payment of the obligation will require the use of current assets. 
D) The compensation either vests with the employee or can be carried forward to subsequent years.

Question 12

Redman Corporation is a publicly held company that supplies tourniquets to medical emergency centers.The company maintains a noncontributory defined benefit pension plan for its employees.The Redman's actuary has provided the following information for the year ended December 31,2014:
 
Prior contributions to the defined benefit pension plan equaled the amount of net periodic pension cost accrued for the previous year end.If no contributions have been made for 2014 pension cost,what amount should Redman report in its December 31,2014,balance sheet for accrued pension cost?

Accepted Answer

A) $218,000 
B) $242,000 
C) $324,000 
D) $406,000 
A) $218,000 
B) $242,000 
C) $324,000 
D) $406,000

Question 13

Employers use a discount rate to compute the actuarial present value of benefits,pension expense,and the obligation of the employer under the pension plan.The choice of the discount rate can have a great effect on measures of pension cost and benefit obligations.Assumptions regarding discount rates must be made carefully in order to ensure that differences in pension plans are properly reflected in the annual reports of companies sponsoring such plans.
Identify factors employers should consider when choosing the discount rate to be used in accounting for pension plans of the enterprise.

Accepted Answer

Assumed discount rates are used in measu

Question 14

Which of the following is not a component of net periodic pension cost?

Accepted Answer

A) Interest cost 
B) Actual return on plan assets 
C) Benefits paid to retirees 
D) Amortization of prior service cost 
A) Interest cost 
B) Actual return on plan assets 
C) Benefits paid to retirees 
D) Amortization of prior service cost

Question 15

Each full-time employee of Hydroponics Greenhouse is entitled to ten paid sick days each year.The sick pay is not vested,but any unused sick days can be carried over to subsequent years.Under FASB ASC Topic 710,Hydroponics Greenhouse should

Accepted Answer

A) recognize sick pay as an expense when actually paid. 
B) recognize an estimated current liability for unused sick pay at the end of each period. 
C) recognize an estimated noncurrent liability for unused sick pay at the end of each period. 
D) accrue or not accrue sick pay based on historical rates of absenteeism. 
A) recognize sick pay as an expense when actually paid. 
B) recognize an estimated current liability for unused sick pay at the end of each period. 
C) recognize an estimated noncurrent liability for unused sick pay at the end of each period. 
D) accrue or not accrue sick pay based on historical rates of absenteeism.

Question 16

Interest cost relating to defined-benefit pension plans represents the

Accepted Answer

A) increase in projected benefit obligation as a result of recomputing the firm's pension obligation when estimated turnover and other relevant factors related to the pension are reassessed. 
B) increase in the projected benefit obligation during the year resulting from all factors affecting the projected benefit obligation. 
C) increase in the projected benefit obligation from the beginning of the year to the end of the year solely due to the passage of time. 
D) expected return on the plan assets for the year. 
A) increase in projected benefit obligation as a result of recomputing the firm's pension obligation when estimated turnover and other relevant factors related to the pension are reassessed. 
B) increase in the projected benefit obligation during the year resulting from all factors affecting the projected benefit obligation. 
C) increase in the projected benefit obligation from the beginning of the year to the end of the year solely due to the passage of time. 
D) expected return on the plan assets for the year.

Question 17

The FASB's conclusion relating to the computation of the service cost component of pension expense is that the projected benefit obligation computed using

Accepted Answer

A) future salary levels provides a reasonable measure of future pension obligation and expense. 
B) future salary levels provides a reasonable measure of present pension obligation and expense. 
C) present salary levels provides a reasonable measure of future pension obligation and expense. 
D) present salary levels provides a reasonable measure of present pension obligation and expense. 
A) future salary levels provides a reasonable measure of future pension obligation and expense. 
B) future salary levels provides a reasonable measure of present pension obligation and expense. 
C) present salary levels provides a reasonable measure of future pension obligation and expense. 
D) present salary levels provides a reasonable measure of present pension obligation and expense.

Question 18

The following information relates to the defined benefit pension plan of the Summersville Company for the year ending December 31,2014:
 
The net amount of the gain or loss component to be included in pension cost for 2014 would be

Accepted Answer

A) $8,500 
B) $32,500. 
C) $47,500. 
D) $77,500. 
A) $8,500 
B) $32,500. 
C) $47,500. 
D) $77,500.

Question 19

What is measured by the accumulated benefit obligation?

Accepted Answer

A) The pension expense, computed by the plan formula applied to years of service to date, assuming future salary levels 
B) The pension expense, computed by the plan formula applied to years of service to date, using existing salary levels 
C) The pension obligation, computed by the plan formula applied to years of service to date, assuming future salary levels 
D) The pension obligation, computed by the plan formula applied to years of service to date, using existing salary levels 
A) The pension expense, computed by the plan formula applied to years of service to date, assuming future salary levels 
B) The pension expense, computed by the plan formula applied to years of service to date, using existing salary levels 
C) The pension obligation, computed by the plan formula applied to years of service to date, assuming future salary levels 
D) The pension obligation, computed by the plan formula applied to years of service to date, using existing salary levels

Question 20

One component of net pension expense,unrecognized gains and losses,comes from which of the following sources?

Accepted Answer

A) Difference between expected and actual prior service and transition costs only 
B) Difference between expected and actual return on plan assets only 
C) Projected benefit obligation changes due to changes in pension assumptions only 
D) Projected benefit obligation changes due to changes in pension assumptions only, and the difference between expected and actual return on plan assets 
A) Difference between expected and actual prior service and transition costs only 
B) Difference between expected and actual return on plan assets only 
C) Projected benefit obligation changes due to changes in pension assumptions only 
D) Projected benefit obligation changes due to changes in pension assumptions only, and the difference between expected and actual return on plan assets

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

The following information relates to the defined benefit pension plan of the Steamer Company for the year ending December 31,2014: The net periodic pension cost reported in the income statement for 2014 would be

If the actual return on pension fund assets exceeds the expected return for the period,the difference is

Which of the following concepts for postretirement benefit plans is comparable to the projected benefit obligation (PBO)of pension plans?

The following information relates to the defined benefit pension plan for the Moldor Company for the year ending December 31, 2014. -Using the information above,the actual return on plan assets for the year is

Which of the following statements characterizes defined contribution plans?

Which of the following criteria is not required for the recognition of a liability for compensated absences under FASB ASC Topic 710?

Which of the following is not a component of net periodic pension cost?

Each full-time employee of Hydroponics Greenhouse is entitled to ten paid sick days each year.The sick pay is not vested,but any unused sick days can be carried over to subsequent years.Under FASB ASC Topic 710,Hydroponics Greenhouse should

Interest cost relating to defined-benefit pension plans represents the

The FASB's conclusion relating to the computation of the service cost component of pension expense is that the projected benefit obligation computed using

The following information relates to the defined benefit pension plan of the Summersville Company for the year ending December 31,2014: The net amount of the gain or loss component to be included in pension cost for 2014 would be

What is measured by the accumulated benefit obligation?

One component of net pension expense,unrecognized gains and losses,comes from which of the following sources?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 17: Employee Compensation-Payroll,pensions, Other Compissues

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

The following information relates to the defined benefit pension plan of the Steamer Company for the year ending December 31,2014: The net periodic pension cost reported in the income statement for 2014 would be

If the actual return on pension fund assets exceeds the expected return for the period,the difference is

Which of the following concepts for postretirement benefit plans is comparable to the projected benefit obligation (PBO)of pension plans?

The following information relates to the defined benefit pension plan for the Moldor Company for the year ending December 31, 2014. -Using the information above,the actual return on plan assets for the year is

Which of the following statements characterizes defined contribution plans?

Which of the following criteria is not required for the recognition of a liability for compensated absences under FASB ASC Topic 710?

Which of the following is not a component of net periodic pension cost?

Each full-time employee of Hydroponics Greenhouse is entitled to ten paid sick days each year.The sick pay is not vested,but any unused sick days can be carried over to subsequent years.Under FASB ASC Topic 710,Hydroponics Greenhouse should

Interest cost relating to defined-benefit pension plans represents the

The FASB's conclusion relating to the computation of the service cost component of pension expense is that the projected benefit obligation computed using

The following information relates to the defined benefit pension plan of the Summersville Company for the year ending December 31,2014: The net amount of the gain or loss component to be included in pension cost for 2014 would be

What is measured by the accumulated benefit obligation?

One component of net pension expense,unrecognized gains and losses,comes from which of the following sources?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Investments in Noncurrent Operating Assets-Utilization and Retirement

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters