Exam 17: Pensions and Other Postretirement Benefits

The following information relates to Schmidt Sausage Co.'s defined benefit pension plan during the current reporting year: (\ in millions) Plan assets beginning of the year \ 400 Expected return on plan assets 40 Actual return on plan assets 32 Cash contributions 60 Amortization of net loss 8 Retiree benefits 9 Required: Determine the amount of pension plan assets at fair value on December 31.

Accumulated other comprehensive income:

Which of the following is not usually part of the pension formula under a defined benefit plan?

The component of pension expense that results from amending a pension plan to give recognition to previous service of currently enrolled employees is the amortization of:

Prior service cost is recognized as pension expense over a period of several years.

The following incomplete (columns have missing amounts) pension spreadsheet is for the current year for First Republic Corporation (FRC). - What was the actuary's interest (discount) rate?

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 Oregon's accumulated postretirement benefit obligation (APBO) at the end of 2018, rounded to the nearest dollar?

Hart Corporation has an unfunded postretirement health care benefit plan. Life insurance and medical care benefits are provided to employees who render 12 years of service and attain age 55 while in service to the company. At the end of 2018, John Sousa is 35. He was hired by Hart five years ago at age 30 and is expected to retire at the age of 62. The expected postretirement benefit obligation for John is $50,000 at the end of 2018. Required: Calculate the accumulated postretirement benefit obligation at the end of 2018 and the service cost for 2018 pertaining to John.

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 a pension loss when:

Actuarial gains and losses are reported as OCI as they occur using:

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 accumulated benefit obligation?

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 Oregon's expected postretirement benefit obligation (EPBO) at the end of 2018, rounded to the nearest dollar?

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

An underfunded pension plan means that the:

Carolina Consulting Company has a defined benefit pension plan. The following pension-related data were available for the current calendar year: There were no other relevant data. Required: 1) Calculate the 2018 pension expense. Show calculations. 2) Prepare the 2018 journal entries to record pension expense and funding. 3) Prepare any journal entries to record any 2018 gains or losses.

Pension expense is decreased by:

Describe how employers report the components of pension expense in the company's financial statements.

Amortizing prior service cost for pension plans will:

Discuss the key quantitative elements of accounting for a defined benefit pension plan.

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. -Postretirement health care