Question 1

At December 31, 2008, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary for Mallory at the end of 2009 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:

Accepted Answer

A)  a debit to Loss-OCI and a credit to APBO.
B)  a debit to APBO and a credit to Loss-OCI.
C)  a debit to Postretirement benefit expense and a credit to APBO.
D)  a debit to Postretirement benefit expense and a credit to Loss-OCI.E) C) and D)
F) A) and B)

Question 2

What were the retiree benefits paid?

Accepted Answer

A)  $45.
B)  $50.
C)  $55.
D)  $60.$400 + 85 + 25 + 65 ? = $530 ? = $45E) A) and D)
F) All of the above

Question 3

Pension expense and funding amounts are both accounting decisions.

Accepted Answer

A) True 
 B)False

Question 4

What is Havana's 2009 actual return on plan assets?

Accepted Answer

A)  $504 thousand
B)  $618 thousand
C)  $1,128 thousand
D)  None of these is correct The computation ($ in 000's)  is as follows:E) A) and C)
F) A) and D)

Question 5

Which of the following describes defined benefit pension plans?

Accepted Answer

A)  The investment risk is borne by the employee.
B)  The plans are simple and easy to construct.
C)  The investment risk is borne by the employer.
D)  Retirement benefits depend on the individual's account balance.E) None of the above
F) A) and B)

Question 6

Gains and losses can occur with pension plans when:

Accepted Answer

A)  Either the PBO or the return on plan assets turns out to be different than expected.
B)  Either the ABO or the return on plan assets turns out to be different than expected.
C)  Either the PBO, the ABO, or the return on plan assets turns out to be different than expected.
D)  Either the PBO or the ABO turns out to be different than expected.E) B) and C)
F) A) and D)

Question 7

On January 1, 2009, Tom's Transport Company's accumulated postretirement benefit obligation was $30,000,000. At the end of 2009, retiree benefits paid were $3,500,000. Service cost for 2009 is $6,000,000. At the end of 2009, there was no prior service cost or net gain or loss. Assumptions regarding the trend of future health care costs were revised at the end of 2009. This revision caused the actuary to revise downward the estimate of the APBO by $500,000. The appropriate discount rate was 6%.
Required:
Determine the amount of the accumulated postretirement benefit obligation at December 31, 2009.

Accepted Answer

The answer of On January 1, 2009, Tom's Transport Company's...

Question 8

Colombo Enterprises has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $14,000; interest cost, $6,000; benefits paid for the year, $9,000; ending PBO, $89,000; and the expected return on plan assets, $10,000. There were no other pension related costs. The journal entry to record the annual pension costs will include a debit to pension expense for:

Accepted Answer

A)  $20,000.
B)  $15,000.
C)  $12,000.
D)  $10,000.E) None of the above
F) B) and C)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  Vested benefit obligation.
B)  Retiree benefit obligation.
C)  Actual benefit obligation.
D)  True benefit obligation.E) All of the above
F) B) and C)

Exam 17: Pensions and Other Postretirement Benefits

What is Havana's 2009 actual return on plan assets?

Correct Answer
verified

At December 31, 2008, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary for Mallory at the end of 2009 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Pension expense and funding amounts are both accounting decisions.

Correct Answer
verified

What were the retiree benefits paid?

Correct Answer
verified

Correct Answer
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Gains and losses can occur with pension plans when:

Correct Answer
verified

Which of the following describes defined benefit pension plans?

Correct Answer
verified

Exam 17: Pensions and Other Postretirement Benefits

What is Havana's 2009 actual return on plan assets?

Correct AnswerverifiedShow Answer

At December 31, 2008, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary for Mallory at the end of 2009 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Pension expense and funding amounts are both accounting decisions.

Correct AnswerverifiedShow Answer

What were the retiree benefits paid?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gains and losses can occur with pension plans when:

Correct AnswerverifiedShow Answer

Which of the following describes defined benefit pension plans?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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