Exam 19: Accounting for Postretirement Benefits

In 2014, the Rachel Company initiated a defined benefit pension plan. It recorded $240,000 as pension expense and paid $280,000 to a funding agency. As a result, Rachel will report

An Internal Revenue Code rule that impacts the design of pension plans is

The expense for other postretirement benefits, such as health care benefits, dental benefits, and eye care benefits, currently is accounted for

Code: A =amortization of unrecognized prior service cost B =interest cost C =gain or loss (to the extent recognized) D =service cost E =expected return on plan assets F =pension expense Which equation would be correct for the calculation of pension expense?

The cost of retroactive benefits granted in a plan amendment or at the initial adoption of a pension plan is called

On December 31, 2014, Clemson Company determined that the 2014 service cost on its defined benefit pension plan was $245,000. At the beginning of 2014, Clemson had pension plan assets totaling $990,000 and a projected benefit obligation of $750,000. Its discount rate and expected long-term rate of return on plan assets for 2014 was 12%. Required: 1) Compute the amount of Clemson's pension expense for 2014. 2) Record the journal entries for Clemson's 2014 pension expense if it funds the pension plan in the amount of (a) $225,000 and (b) $210,000.

Gage began a defined benefit pension plan on January 1, 2014. During 2014, the service cost was $450,000. Gage contributed $450,000 to the pension plan for 2014. The actuary said the projected benefit obligation at December 31, 2014 was $450,000. As of December 31, 2014, what statements can Gage make about the pension plan? I.The pension plan is fully funded. II.Gage does not need to report a liability regarding the pension plan at December 31, 2014.

ERISA (Pension Reform Act of 1974) provides guidance for

Which of the following would not be a component of pension expense?

The vested benefit obligation is the benefits employees are entitled to receive even if they are no longer employed by the company.

The Lucas Company offers employees a defined contribution pension plan. In 2014, Lucas contributed $175,000 to the plan, which paid $195,000 to retired employees. Which of the following statements is true?

The corridor is defined as

Given the following information What is pension expense for 2015?

Which of the following statements is true concerning prior service cost?

In June of 2011 IASB amended IAS 19, Employee Benefits, changing its method of accounting for pensions in order to make the accounting for pensions similar under U.S. GAAP and IFRS.

ACE has a defined benefit pension plan. ACE is preparing the December 31, 2014 financial statement disclosures related to the plan assets. It should disclose which of the following?

Which of the following statements is true?

What disclosures are required by GAAP about a company's defined benefit pension plan?

Accounting regulators opted to recognize the liability and reduce other comprehensive income, then amortize the prior service cost as a component of pension expense. The liability is reduced and other comprehensive income is increased as the prior service amount is amortized. This method was chosen even though it violates the matching concept due to constituent arguments.

On January 1, 2014, a company had $84,000 of unrecognized prior service cost. The years-of-future-service method of amortization is used. The company has seven employees, as indicated below: What amount of prior service cost should be included in pension expense for 2014?