Question 1

In a defined benefit pension plan, the journal entry to record the employer's annual cash contribution to plan assets:

Accepted Answer

A)  reduces the employer's obligation to pay benefits 
B)  includes a credit to plan assets 
C)  might reduce next period's pension expense 
D)  includes a debit to cash 
A)  reduces the employer's obligation to pay benefits 
B)  includes a credit to plan assets 
C)  might reduce next period's pension expense 
D)  includes a debit to cash

Question 2

The net postretirement benefit liability (APBO minus plan assets) is increased by:

Accepted Answer

A)  Service cost. 
B)  Expected return on plan assets. 
C)  Amortization of net gain. 
D)  Cash contributions to plan assets. 
A)  Service cost. 
B)  Expected return on plan assets. 
C)  Amortization of net gain. 
D)  Cash contributions to plan assets.

Question 3

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-Amortize net loss-AOCI

Accepted Answer

A) Future compensation levels estimated. 
B) Not contingent on continued employment. 
C) Gain from revised expectation of return plan assets. 
D) Increased by employer contributions. 
E) Excess over 10% of the larger of plan assets or PBO. 
A) Future compensation levels estimated. 
B) Not contingent on continued employment. 
C) Gain from revised expectation of return plan assets. 
D) Increased by employer contributions. 
E) Excess over 10% of the larger of plan assets or PBO.

Question 4

On December 31, 2018, the following pension-related data were available for CPS Industries' noncontributory, defined benefit pension plan:   Required:
1) Prepare the 2018 journal entry to record pension expense.
2) How will the statement of comprehensive income be affected by any 2018 gains and losses?

Accepted Answer

1) @#IMG-DLM& 2) The statement of comprehensive in

Question 5

In a postretirement health care plan, prior service cost is attributed to the service of active employees from the date of the amendment to:

Accepted Answer

A)  The partial eligibility date. 
B)  The retirement date. 
C)  The full eligibility date. 
D)  The date of death. 
A)  The partial eligibility date. 
B)  The retirement date. 
C)  The full eligibility date. 
D)  The date of death.

Question 6

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-EPBO

Accepted Answer

A) Risk borne by employee. 
B) Return on plan assets lower or (higher) than expected. 
C) Increase in the PBO. 
D) Used by actuaries to adjust for the time value of money. 
E) Actuarial estimate of other postretirement benefits to be received by participants.
F)Trade-off between relevance and reliability. 
A) Risk borne by employee. 
B) Return on plan assets lower or (higher) than expected. 
C) Increase in the PBO. 
D) Used by actuaries to adjust for the time value of money. 
E) Actuarial estimate of other postretirement benefits to be received by participants.
F)Trade-off between relevance and reliability.

Question 7

The pension expense includes periodic changes that occur:

Accepted Answer

A)  In the PBO. 
B)  In the PBO and the plan assets. 
C)  In the plan assets. 
D)  In the PBO and the ABO. 
A)  In the PBO. 
B)  In the PBO and the plan assets. 
C)  In the plan assets. 
D)  In the PBO and the ABO.

Question 8

To help assess the uncertainties that surround a defined benefit pension plan, corporations frequently hire a(n):

Accepted Answer

A)  CPA. 
B)  Attorney. 
C)  Investment analyst. 
D)  Actuary. 
A)  CPA. 
B)  Attorney. 
C)  Investment analyst. 
D)  Actuary.

Question 9

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-Prior service cost

Accepted Answer

A) Caused by plan amendment. 
B) Causes a loss-other comprehensive income. 
C) Causes a gain-other comprehensive income. 
D) Caused by changes in assumptions used to measure the PBO. 
E) Pension plan assets exceed the PBO. 
A) Caused by plan amendment. 
B) Causes a loss-other comprehensive income. 
C) Causes a gain-other comprehensive income. 
D) Caused by changes in assumptions used to measure the PBO. 
E) Pension plan assets exceed the PBO.

Question 10

Which of the following is not a potential component of pension expense?

Accepted Answer

A)  Return on plan assets. 
B)  Prior service cost. 
C)  Retiree benefits paid. 
D)  Gains and losses. 
A)  Return on plan assets. 
B)  Prior service cost. 
C)  Retiree benefits paid. 
D)  Gains and losses.

Question 11

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

Accepted Answer

A)  The first five years of service. 
B)  The year of hire. 
C)  The employee probation period. 
D)  The years of service beyond the full eligibility date. 
A)  The first five years of service. 
B)  The year of hire. 
C)  The employee probation period. 
D)  The years of service beyond the full eligibility date.

Question 12

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed:

Accepted Answer

A)  The EPBO would be $12,000. 
B)  The EPBO would be $8,400. 
C)  The APBO would be $8,400. 
D)  The APBO would be $12,000. 
A)  The EPBO would be $12,000. 
B)  The EPBO would be $8,400. 
C)  The APBO would be $8,400. 
D)  The APBO would be $12,000.

Question 13

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

Accepted Answer

Retiree health benefits differ fundament

Question 14

A net pension asset is the excess of the projected benefit obligation over the plan assets.

Accepted Answer

A) True 
 B)False

Question 15

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?

Accepted Answer

Gains and losses (either from changing a

Question 16

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-Loss or (gain) on plan assets

Accepted Answer

A) Risk borne by employee. 
B) Return on plan assets lower or (higher) than expected. 
C) Increase in the PBO. 
D) Used by actuaries to adjust for the time value of money. 
E) Actuarial estimate of other postretirement benefits to be received by participants.
F)Trade-off between relevance and reliability. 
A) Risk borne by employee. 
B) Return on plan assets lower or (higher) than expected. 
C) Increase in the PBO. 
D) Used by actuaries to adjust for the time value of money. 
E) Actuarial estimate of other postretirement benefits to be received by participants.
F)Trade-off between relevance and reliability.

Question 17

Castillo Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $18,000; interest cost, $5,000; benefits paid for the year, $9,000; ending PBO, $89,000; the expected return on plan assets, $10,000; and cash deposited with pension trustee, $17,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a credit to the PBO for:

Accepted Answer

A)  $13,000. 
B)  $17,000. 
C)  $18,000. 
D)  $23,000. 
A)  $13,000. 
B)  $17,000. 
C)  $18,000. 
D)  $23,000.

Question 18

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term.
-Overfunded pension plan

Accepted Answer

A) Caused by plan amendment. 
B) Causes a loss-other comprehensive income. 
C) Causes a gain-other comprehensive income. 
D) Caused by changes in assumptions used to measure the PBO. 
E) Pension plan assets exceed the PBO. 
A) Caused by plan amendment. 
B) Causes a loss-other comprehensive income. 
C) Causes a gain-other comprehensive income. 
D) Caused by changes in assumptions used to measure the PBO. 
E) Pension plan assets exceed the PBO.

Question 19

Waddle Company amended its defined benefit pension plan on January 1, 2018, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years.
Required:
1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in 2018.
2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in 2018.

Accepted Answer

Requirement 1 @#IMG-DLM& @#IMG-DLM& Requ

Question 20

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

Accepted Answer

A)  Increase retained earnings and increase accumulated other comprehensive income. 
B)  Decrease retained earnings and decrease accumulated other comprehensive income. 
C)  Increase retained earnings and decrease accumulated other comprehensive income. 
D)  Decrease retained earnings and increase accumulated other comprehensive income. 
A)  Increase retained earnings and increase accumulated other comprehensive income. 
B)  Decrease retained earnings and decrease accumulated other comprehensive income. 
C)  Increase retained earnings and decrease accumulated other comprehensive income. 
D)  Decrease retained earnings and increase accumulated other comprehensive income.

In a defined benefit pension plan, the journal entry to record the employer's annual cash contribution to plan assets:

The net postretirement benefit liability (APBO minus plan assets) is increased by:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Amortize net loss-AOCI

In a postretirement health care plan, prior service cost is attributed to the service of active employees from the date of the amendment to:

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -EPBO

The pension expense includes periodic changes that occur:

To help assess the uncertainties that surround a defined benefit pension plan, corporations frequently hire a(n):

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Prior service cost

Which of the following is not a potential component of pension expense?

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

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed:

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

A net pension asset is the excess of the projected benefit obligation over the plan assets.

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?

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Loss or (gain) on plan assets

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Overfunded pension plan

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

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters

Exam 17: Pensions and Other Postretirement Benefits

In a defined benefit pension plan, the journal entry to record the employer's annual cash contribution to plan assets:

The net postretirement benefit liability (APBO minus plan assets) is increased by:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Amortize net loss-AOCI

In a postretirement health care plan, prior service cost is attributed to the service of active employees from the date of the amendment to:

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -EPBO

The pension expense includes periodic changes that occur:

To help assess the uncertainties that surround a defined benefit pension plan, corporations frequently hire a(n):

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Prior service cost

Which of the following is not a potential component of pension expense?

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

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed:

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

A net pension asset is the excess of the projected benefit obligation over the plan assets.

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?

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Loss or (gain) on plan assets

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Overfunded pension plan

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

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, Comprehensive Income, and the Statement of Cash Flows

Revenue Recognition

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, Plant, and Equipment and Intangible Assets: Acquisition

Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes and Error Corrections

The Statement of Cash Flows Revisited

Filters