Exam 17: Pensions and Other Postretirement Benefits

Patey Technologies calculated pension expense for its underfunded pension plan as follows: Required: What is the effect of the components of pension expense on Patey's statement of comprehensive income?

Payment of retirement benefits:

An overfunded pension plan means that the:

Use the following to answer questions The following incomplete (columns have missing amounts)pension spreadsheet is for Old Tucson Corporation (OTC). -What was the prior service cost at the beginning of the year?

At December 31,2015,Mallory,Inc. ,reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan.The actuary for Mallory at the end of 2016 increased her estimate of future health care costs.Mallory's entry to record the effect of this change will include:

On January 1,2015,WOW amended its defined benefit pension plan.The amount of prior service costs caused by this action was $720,000.WOW uses the service method for amortizing prior service costs.The following service years were provided by the company actuary: 2015,20;2016,15;2017,12;2018,8;and 2019,5.Twenty employees benefit from this amendment.In 2016,the amortization amount would be:

Which one of the following assumptions is needed to estimate both postretirement health care benefits and pension benefits?

In its 2016 annual report to shareholders,Livey Companies Inc.(LCI)disclosed the following information regarding its postemployment benefit plans: The Company and certain of its affiliates sponsor postemployment benefit plans covering substantially all salaried and certain hourly employees.The cost of these plans is charged to expense over the working life of the covered employees.Net postemployment costs consisted of the following for the years ended December 31,2016,2015,and 2014: The company instituted workforce reduction programs in its North American food operations in 2014.These actions resulted in incremental postemployment costs,which are shown as other expense above. Required: Describe the three components in the net postemployment costs disclosed by LCI.

Which of the following statements typifies defined contribution plans?

Prior service cost is recognized as pension expense over a period of several years.

Recording pension expense would usually:

Prepare a list of how retiree health benefits differ from pension benefits with respect to accounting,funding,regulation,and employee benefits.

An upward revision of inflation and compensation trends would likely cause a gain in the pension benefit obligation.

A net gain or loss affects the pension expense only if it exceeds an amount equal to what percentage of the PBO or plan assets,whichever is higher?

The EPBO for a particular employee on January 1,2016,was $150,000.The APBO at the beginning of the year was $30,000.The appropriate discount rate for this postretirement plan is 5%.The employee is expected to serve the company for a total of 25 years with 5 of those years already served as of January 1,2016.What is the APBO at December 31,2016?

The attribution period for postretirement health care plans does not include:

Amortizing a net gain for pensions and other postretirement benefit plans will:

Which of the following describes defined benefit pension plans?

Prior to 1993,postretirement benefits other than pensions generally were accounted for on the:

Colombo Enterprises has a defined benefit pension plan.At the end of the reporting year,the following data were available: beginning PBO,$75,000;service cost,$14,000;interest cost,$6,000;benefits paid for the year,$9,000;ending PBO,$89,000;and the expected return on plan assets,$10,000.There were no other pension-related costs.The journal entry to record the annual pension costs will include a debit to pension expense for: