Exam 17: Pensions and Other Postretirement Benefits

Brown Industries provides postretirement health care benefits to employees.On January 1 of the current calendar year,the following data were available. Management amortizes prior service cost on a straight-line basis.The interest rate is 10%.Service cost for the current year is $95,000. Required: 1)Calculate the prior service cost amortization for the current year. 2)Calculate the postretirement benefit expense for the current year. 3)Prepare the entry to record the postretirement benefit expense for the current year.

Revenue and expense items and components of other comprehensive income can be reported in the statement of shareholders' equity using:

Use the following to answer questions In its 2016 annual report to shareholders,JDS Corporation disclosed the following information about its pension plan: The increase in the underfunded projected benefit obligation was primarily attributable to a reduction in the assumed discount rate.This was combined with the effect of increases in benefits under the terms of the plan in excess of current inflation rates.The net result was reflected as a reduction in accumulated other comprehensive income. -Explain how the loss is reported in the financial statements (other than the balance sheet).

Which of the following is true?

The employer has an obligation to provide future benefits for:

Pension gains related to plan assets occur when:

Prior service cost is expensed immediately using:

Use the following to answer questions The following data are for Guava Company's retiree health care plan for the current calendar year. -What is the service cost to be included in the current year's postretirement benefit expense?

A net gain or net loss affects pension expense only if it exceeds 10% of the pension benefit obligation or 10% of plan assets,whichever is lower.

ERISA made major changes in the requirements for pension plan:

Wainright Co.began the year with a net pension liability of $112 million (underfunded pension plan).Pension expense for the year included the following ($ in millions): service cost,$40;interest cost,$24;expected return on assets,$16;amortization of net loss,$8;amortization of prior service cost,$12. Required: Prepare the appropriate general journal entry to record Wainright's pension expense.

The following data are available pertaining to Firewall Corporation's retiree health plan for 2016: Required: 1)What is the APBO at the beginning of 2016? 2)What is the interest cost for 2016? 3)What is service cost for 2016? 4)Prepare the journal entry to record the postretirement benefit expense for 2016.

Persoff Industries International has a defined benefit pension plan.The company revised its estimate of future salary levels causing its defined benefit obligation to increase by $16 million.Also,Persoff's $25 million actual return on plan assets exceeded the 5% high-grade corporate bond rate times the $440 million plan assets.Persoff prepares its financial statements in accordance with International Financial Reporting Standards (IFRS).The company will:

What is the 2016 service cost for Havana's plan?

The APBO increases each year by the:

A company's defined benefit pension plan had a PBO of $265,000 on January 1,2016.During 2016,pension benefits paid were $40,000.The discount rate for the plan for this year was 10%.Service cost for 2016 was $80,000.Plan assets (fair value)increased during the year by $45,000.The amount of the PBO at December 31,2016,was:

Consider the following: I.Present value of vested benefits at present pay levels. II.Present value of nonvested benefits at present pay levels. III.Present value of additional benefits related to projected pay increases. Which of the above constitutes the projected benefit obligation?

When the service method is used for amortizing prior service costs,the amount recognized each year is:

Amortizing prior service cost for pension plans will:

Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer's balance sheet?