Exam 17: Pensions and Other Postretirement Benefits

The process of assigning the cost of postretirement benefits to the years during which those benefits are assumed to be earned by employees is called:

DeAngelo Yards, Inc., calculated pension expense for its underfunded pension plan as follows: Required: Which elements of DeAngelo's balance sheet are affected by the components of pension expense? What are the specific changes in these accounts?

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?

Under IFRS, components of other comprehensive income:

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

When accounting for pensions, delayed recognition of gains and losses in earnings achieves:

Orpheum Productions has a noncontributory, defined benefit pension plan. On December 31, 2018 (the end of Orpheum's fiscal year), the following pension-related data were available: Required: 1) Prepare the 2018 journal entry to record pension expense. 2) Prepare the 2018 journal entry to record the contribution to plan assets. 3) Prepare the journal entries to record any 2018 gains and losses.

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. -Defined benefit plan

Differentiate between a defined contribution pension plan and a defined benefit pension plan.

Carpenter Gems began the year with a net pension liability of $84 million (underfunded pension plan). Pension expense for the year included the following ($ in millions): service cost, $30; interest cost, $18; expected return on assets, $12; amortization of net loss, $6. Required: Prepare the appropriate general journal entry to record Carpenter's pension expense.

The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability?

Crystal Company has an unfunded retiree health care plan. Each of the company's four employees has been with the organization since its inception at the beginning of 2017. As of the end of 2018, the actuary estimates the total net cost of providing benefits to employees during their retirement years to have a present value of $196,000. Each of the employees will become fully eligible for benefits after 28 more years of service, but aren't expected to retire for 30 more years. The interest rate is 8%. Required: 1) What is the expected postretirement benefit obligation at the end of 2018? 2) What is the accumulated postretirement benefit obligation at the end of 2018? 3) What is the expected postretirement benefit obligation at the end of 2019? 4) What is the accumulated postretirement benefit obligation at the end of 2019?

The APBO increases each year by the:

Top Foods has an underfunded pension plan. The pension expense is $58 million. This amount includes a $60 million service cost, a $40 million interest cost, a $45 million reduction for the expected return on plan assets, and a $3 million amortization of a prior service cost. Required: Prepare the appropriate journal entry to record Top's pension expense.

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. -Vested benefit obligation

Careful Consulting Company has an unfunded postretirement benefit plan. On December 31, 2018, the following data were available concerning changes in the plan's accumulated postretirement benefit obligation with respect to one of Careful's employees: Required: 1) Over how many years is the expected postretirement benefit obligation being expensed? 2) What is the expected postretirement benefit obligation at the end of 2018? 3) When was the employee hired? 4) What is the expected postretirement benefit obligation at the beginning of 2018?

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. - An employer reports the components of pension expense outside the subtotal of income from operations with the exception of:

Pension expense and funding amounts are both accounting decisions.

The following information relates to Hatami Company's defined benefit pension plan during the current reporting year: Plan assets at fair value, January 1 \ 600,000,000 Expected return on plan assets 50,000,000 Actual return on plan assets 40,000,000 Contributions to the pension fund (end of year) 90,000,00 Amortization of net loss 0 Pension benefits paid (end of year) 32,000,000 Pension expense 60,000,000 Required: Determine the balance of pension plan assets at fair value on December 31.

A gain from changing an estimate regarding the obligation for pension plans will: