17newyawk

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Which of the following is not a requirement for a qualified pension plan?

b. It must cover at least 80% of the employees

Which of the following is not a characteristic of a qualified pension plan?

a. It can be limited to highly-compensated salaried employees

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

c. Seniority at time of retirement

Which of the following describes defined benefit pension plans

d. Retirement benefits are based on the plan benefit formula

Which of the following describes defined benefit pension plans?

c. The investment risk is borne by the employer

Defined contribution pension plans that link the amount of contributions to company performance areoften called

a. Incentive savings plan

The accounting for defined contribution pension plans is easy because each year

c. The employer records pension expense equal to the annual contribution

Which of the following is not an uncertainty that complicates determining how much to set aside eachyear to ensure that sufficient funds are available to provide the benefits promised under a definedbenefit plan

b. Number of employees who retired last year

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

d. actuary

The employer has an obligation to provide future benefits for

a. defined benefit pension plans

Which of the following statements typifies defined contribution plans

d. The employer's obligation is satisfied by making the periodic contribution to the plan.

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

a. A defined benefit plan only

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

c. Retiree benefit obligation

The portion of the obligation that plan participants are entitled to receive regardless of their continuedemployment is called the

a. Vested benefit obligation

ERISA made major changes in the requirements for pension plan

a. Vesting

Compared to the ABO, the PBO usually is

d. Less reliable

Compared to the ABO, the PBO usually is

a. Larger.

Which of the above constitutes the accumulated benefit obligation

a. I&II

Which of the above constitutes the projected benefit obligation

c. I, II, III

Which of the above constitutes the vested benefit obligation

d. I only

Interest cost will

a. Increase the PBO and increase pension expense

The PBO is increased by

a. An increase in the average life expectancy of employees

Payment of retirement benefits

d. Reduces the PBO

A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2011. During 2011,pension benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service costfor 2011 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of thePBO at December 31, 2011, was

c. 331,500

Mars Inc. has a defined benefit pension plan. On December 31 (the end of the fiscal year), the companyreceived the PBO report from the actuary. The following information was included in the report: endingPBO, $110,000; benefits paid to retirees, $10,000; interest cost, $7,200. The discount rate applied by theactuary was 8%. What was the beginning PBO?

a. 90,000

Louie Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), thecompany received the PBO report from the actuary. The following information was included in thereport: ending PBO, $110,000; benefits paid to retirees, $10,000; interest cost, $8,000. The discount rateapplied by the actuary was 8%. What was the service cost for the year?

b. 12,000

What is the 2011 service cost for Havana's plan

c. 648 thousand

What is Havana's 2011 actual return on plan assets

a. $504 thousand

What is Havana's 2011 gain or loss on plan assets

d. None of the above is corr

What is the 2011 pension expense for Havana's plan

b. 606 thousand

An underfunded pension plan means that th

b. PBO exceeds plan assets

An overfunded pension plan means that the

a. PBO is less than plan assets

Data for 2011 were as follows: PBO, January 1, $240,000 and December 31, $270,000; pension planassets (fair value) January 1, $180,000, and December 31, $230,000. The projected benefit obligationwas underfunded at the end of 2011 by

d. 40,000

Pension expense is decreased by

b. Amortization of net gain

Interest cost is calculated by multiplying the

d. PBO by the discount rate

The three components of pension expense that are present most often are

d. service cost, interest cost, and expected return on plan asset

The pension expense includes periodic changes that occur

b. In the PBO and the plan assets

Which of the following is true

a. A projected benefits approach is used to determine the periodic pension expense.

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

a. prior service costs

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

d. Income smoothing

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

Retiree benefits paid

A net gain or loss affects the pension expense only if it exceeds an amount equal to what percentage of the PBO or plan assets, whichever is higher

b. 10%

Pension gains related to plan assets occur when

The return on plan assets is higher than expected

The amortization of a net gain has what effect on pension expense

a. Decreases it.

Assume that at the beginning of the current year, a company has a net gain-AOCI of $25,000,000. Atthe 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. Whatis the amount of amortization to pension expense for the year?

b. $500,000.

Assume that at the beginning of the current year, a company has a net gain-AOCI of $60,000,000. Atthe same time, assume the PBO and the plan assets are $300,000,000 and $450,000,000, respectively.The average remaining service period for the employees expected to receive benefits is 10 years. Whatis the amount of amortization to pension expense for the year?

c. 1,500,000

Amortizing prior service cost for pension plans will

d. Decrease retained earnings

scallion, The long-term expected rate of return on plan assets is 10%. Assuming no other data are relevant, whatis the pension expense for the year?

d. $202,000

Fox, The long-term expected rate of return on plan assets is 8%. Assuming no other data are relevant, what isthe pension expense for the year?

a. 384,000

Dreamworld, Assuming no other relevant data exist, what is the pension expense for the year

b. $92,400

Simpson, Assuming no other relevant data exists, what is the pension expense for the year?

c. $121,400

Colombo Enterprises has a defined benefit pension plan. At the end of the reporting year, the followingdata were available
:
beginning PBO, $75,000; service cost, $14,000; interest cost, $6,000; benefits paidfor the year, $9,000; ending PBO, $89,000; and the expected return on plan assets, $10,000. There wereno other pension related costs. The journal entry to record the annual pension costs will include a debitto pension expense for

d. 10,000

What was the net pension asset/liability reported in the balance sheet at the end of the year?

d. Net pension liability of $24

What was FRC's pension expense for the year

b. 47

What was the actuary's interest (discount) rate?

a. 7%

What was PVE's pension expense for the year

d. 62

What was the PBO at the beginning of the year?

b. 400

What were the retiree benefits paid

a. 45

Which of the following is a correct statement concerning the reporting of the pension plan on the face of the employer's balance sheet?

d. Neither the PBO nor the plan assets is separately reported

Recording pension expense would usually

a. increase the PBO

Accumulated other comprehensive income

b. might include prior service cost

A statement of comprehensive income does not include

b. Losses from the return on assets exceeding expectations

Amortizing prior service cost for pension plans will

d. Decrease retained earnings and increase accumulated other comprehensive income

A statement of comprehensive income does not include

b. Gains and losses on unsold held-to-maturity securities

Gains and losses can occur with pension plans when

a. Either the PBO or the return on plan assets turns out to be different than expected

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

d. increase shareholders' equity

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

d. 23,000

At December 31, 2010, Mongo, Inc. reported in its balance sheet a net loss of $3 million related to itspension plan. The actuary for Mongo at the end of 2011 increased her estimate of future salary levels.Mongo's entry to record the effect of this change will include

a. a debit to Loss-OCI and a credit to PBO

JL Health Services reported a net loss-AOCI in last year's balance sheet. This year, the company revisedits estimate of future salary levels causing its PBO estimate to decline by $24. Also, the $48 millionactual return on plan assets was less than the $54 million expected return. As a resul

c. accumulated other comprehensive income will increase by $18 million

Amortizing a net loss for pensions will

d. decrease retained earnings and increase accumulated other comprehensive income

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

c. increase retained earnings and decrease accumulated other comprehensive income

Amortizing prior service cost for pensions and other postretirement benefit plans will

a. Decrease retained earnings.

The key elements of a defined benefit pension plan include all of the following except

c. Amortized future benefits

The net pension liability (PBO minus plan assets) is increased by

a. Service cost

The net pension liability (PBO minus plan assets) is decreased by

b. Expected return on plan assets

Old Tucson, What was the prior service cost at the beginning of the year?

d. 60

What is OTC's pension expense for the year

a. 78

What was the balance of the net pension asset/liability reported in the balance sheet at the end of theprevious year?

c. Net pension liability of $250

Prior to 1993, postretirement benefits other than pensions generally were accounted for on t

b. Cash basis

According to generally accepted accounting principles, accounting for postretirement benefits other thanpensions must adhere to the

a. Accrual basis of accounting

Accounting for postretirement health care benefits is similar, in most respects, to accounting for

c. Pension benefits

Eligibility for postretirement health care benefits usually is based on the employee's

d. Age and/or years of service.

Eligibility requirements and the nature of benefits for postretirement health care plans usually arespecified in the

a. Written plan

Which of the following is not included among the assumptions needed to estimate postretirement healthcare benefits?

d. Return on plan assets

Which one of the following assumptions is needed to estimate both postretirement health care benefitsand pension benefits?

d. Employee turnove

The estimated medical costs are expected to be $7,500 during an employee's retirement. The retireeis expected to pay 30% of the cost and Medicare is expected to pay 50% of the cost. What is thecompany's estimated net cost of benefits?

c. 1,500

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

a. An allocation to the current year of a portion of an estimated fixed total cost

Pension benefits and postretirement health benefits typically are similar in thei

a. Application of present value concept

A company's total obligation for postretirement benefits is measured by the

d. EPBO

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

c. Attribution

The attribution period for postretirement benefits spans each year of service from the employee's date of hire to the employee's date of

a. Full eligibility

The attribution period for postretirement health care plans does not include

d. The years of service beyond the full eligibility date

If no estimates are changed and there is no net loss or gain or prior service cost, which of the followingamounts related to an unfunded postretirement benefit plan will not increase with each additional yearof service before the full eligibility date?

a. Other comprehensive income

The postretirement benefit obligation is the

b. Present value of the estimated benefits during retirement

The APBO increases each year by the

a. Interest accrued on the APBO and the portion of the EPBO attributed to that year

The attribution approach required by GAAP for postretirement health care plans is to assign

d. An equal fraction of the EPBO to each year of service from the employee's hire date to theemployee's full eligibility date

The amount of cash paid annually for unfunded postretirement health benefit plans, assuming they arenot independently insured, usually is equal to:

d. the amount necessary to pay the current year's health care cost

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