Exam 17: Pensions and Other Postretirement Benefits

Assume that at the beginning of the current year, a company has a net gain-AOCI of $25,000,000. At the same time, assume the PBO and the plan assets are $200,000,000 and $150,000,000, respectively. The average remaining service period for the employees expected to receive benefits is 10 years. What is the amount of amortization to pension expense for the year?

Harvey Hotels has provided a defined benefit pension plan for its employees for several years. At the end of the most recent year, the following information was available with regard to the plan: service cost: $6.2 million, expected return on plan assets: $1.2 million, actual return on plan assets: $1 million, interest cost: $1.4 million, payments to retired employees: $2 million, and amortization of prior service cost (created when the pension plan was amended causing a drop in the projected benefit obligation): $1.1 million. What amount should Harvey Hotels report as pension expense in its income statement for the year?

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. -Attribution

With pensions, service cost reflects additional benefits employees earn from an additional year's service. The service cost for retiree health care plans is:

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?

Oregon Co.'s employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and they have completed 35 years of service. The benefits provide 15 years reimbursement for health care services of $20,000 annually, beginning one year from the date of retirement. Ralph Young was hired at the beginning of 1977 by Oregon after turning age 22 and is expected to retire at the end of 2020 (age 60). The discount rate is 4%. The plan is unfunded. The PV of an ordinary annuity of $1 where n = 15 and i = 4% is 11.11839. The PV of $1 where n = 2 and i = 4% is 0.92456. - With respect to Ralph, what is the interest cost to be included in Oregon's 2019 postretirement benefit expense, rounded to the nearest dollar?

The projected benefit obligation:

On January 1, 2017, 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: 2017, 20; 2018, 15;2019, 12;2020, 8; and 2021, 5. Twenty employees benefit from this amendment. In 2018, the amortization amount would be:

On January 1, 2018, Gillock Climbing Academy instituted a defined benefit pension plan for its employees. The annual service cost for each year of 2018 and 2019 was $600,000. The interest rate used to determine the projected benefit obligation is 10%. Both the actual and the expected return on plan assets are 8% for both years. Gillock funded the plan in the amount of $400,000 each January 1, beginning on January 1, 2018. - What amount of pension expense should Gillock report in its income statement for the year ended December 31, 2019?

The following refers to the pension spreadsheet (columns have missing amounts) for the current year for Pancho Villa Enterprises (PVE). -What were the retiree benefits paid?

In a defined benefit pension plan, gains and losses (either from changing assumptions regarding the PBO or from the return on assets being higher or lower than expected) are:

Which of the following is not a way of measuring the pension obligation?

Which of the following describes defined benefit pension plans?

Prior service cost is expensed immediately using:

The following is an incomplete pension spreadsheet for the current year for Desperado Corporation. Required: 1) Complete the pension spreadsheet. 2) Prepare the journal entry to record pension expense for the year.

Which of the following describes defined benefit pension plans?

Generic Company sponsors an unfunded postretirement plan providing healthcare benefits. The following information relates to the current year's activity of Generic's postretirement benefit plan: Postretirenent benefit expense 150 mullion Service cost 120 million Amortization of net gain-AOCI 10 millior Prior service cost-AOCI none Retiree benefits paid (end of year) 30 milliory The interest cost for the year is:

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

Data pertaining to the postretirement health care benefit plan of Amazing Delivery Service include the following for the current calendar year: Required: 1) Determine Amazing's postretirement benefit expense for the current year. 2) Prepare the journal entry to record the benefit expense for the current year.

Pension data for Matta Corporation include the following for the current calendar year: (\ in millions ) Discountrate, 10\% , January 1 \ 360 , December 31 450 , January 1 200 December31 275 Cash, contributions to pension fund, December 31 100 Benefit payments to retirees, December 31 54 Required: Assuming no change in actuarial assumptions and estimates, determine the service cost component of pension expense for the current year.