Question 1

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

Accepted Answer

A)   The pension expense.
B)   The plan assets.
C)   Amortized future benefits.
D)   The employer's obligation.E) A) and D)
F) All of the above

Question 2

Which of the following statements typifies defined contribution plans?

Accepted Answer

A)   Investment risk is borne by the corporation sponsoring the plan.
B)   The plans are more complex than defined benefit plans.
C)   Present value factors are used to determine the annual contributions to the plan.
D)   The employer's obligation is satisfied by making the periodic contribution to the plan.E) None of the above
F) A) and B)

Question 3

The following information is related to the defined benefit pension plan of Dreamworld Company for the year:   
-Assuming no other relevant data exist, what is the pension expense for the year?

Accepted Answer

A)   $190,000.
B)   $92,400.
C)   $60,000.
D)   $170,000.E) A) and D)
F) None of the above

Question 4

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.
-APBO (postretirement)

Accepted Answer

A)  The portion of the EPBO attributed to employee service to date.
B)  Portion of the EPBO attributed to the current period.
C)  Process of assigning the cost of benefits to the years during which those benefits are assumed to be earned by employees.
D)  Related to need, not service.
E)  Discounted present value of total postretirement benefit costs.F) Discount rate times beginning APBO.G) E) and F)
H) A) and E)

Question 5

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 projected benefit obligation?

Accepted Answer

A)   III only.
B)   I, II.
C)   I, II, III.
D)   II only.E) None of the above
F) A) and C)

Question 6

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

Accepted Answer

A)   Job title.
B)   Number of years in the profession.
C)   Number of years in the current position.
D)   Age and/or years of service.E) B) and D)
F) A) and B)

Question 7

Defined contribution pension plans that link the amount of contributions to company performance are often called:

Accepted Answer

A)   Incentive savings plans.
B)   Thrift plans.
C)   Savings plans.
D)   None of these is correct.E) B) and D)
F) C) and D)

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) All of the above

Question 9

If a pension plan is underfunded, the company has a net loss-OCI.

Accepted Answer

A) True 
 B)False

Question 10

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.
-Vesting requirements

Accepted Answer

A)  Included in the calculation of pension expense.
B)  Retirement benefits specified by formula.
C)  Reduce(s)  both the PBO and plan assets.
D)  Protection for employee pension rights.
E)  Reported as a shareholders' equity account.F) C) and D)
G) A) and B)

Question 11

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.
-Delayed recognition in earnings

Accepted Answer

A)  Future compensation levels estimated.
B)  Not contingent on continued employment.
C)  Gain from revised expectation of return plan assets.
D)  Increased by employer contributions.
E)  Excess over 10% of the larger of plan assets or PBO.F) None of the above
G) B) and D)

Question 12

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.
-Service cost

Accepted Answer

A)  The portion of the EPBO attributed to employee service to date.
B)  Portion of the EPBO attributed to the current period.
C)  Process of assigning the cost of benefits to the years during which those benefits are assumed to be earned by employees.
D)  Related to need, not service.
E)  Discounted present value of total postretirement benefit costs.F) Discount rate times beginning APBO.G) A) and F)
H) A) and D)

Question 13

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

A)   5%.
B)   10%.
C)   15%.
D)   20%.E) None of the above
F) A) and B)

Question 15

In its 2018 annual report to shareholders, JDS Corporation disclosed the following information about its pension plan:
$$\begin{array} { | l | r | r | } 
\hline \text { (\$ in millions) } & \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 7 } \
\hline \text { PROJECTED BENEFIT } & & \
\text { OBLIGATION } & & \
\hline \text { Beginning balance } & \$ 120.0 & \$ 102.2 \
\hline \text { Service cost } & 4.1 & 5.5 \
\hline \text { Interest cost } & 7.0 & 6.5 \
\hline \text { Benefits paid } & ( 2.6 ) & ( 4.4 ) \
\hline \text { Actuarial loss } & \underline { 6.6 } & \underline { 11.4 } \
\hline \text { Ending balance } & \$ 135.1 & \$ 121.2 \
\hline
\end{array}$$
The increase in the underfunded projected benefit obligation was primarily attributable to a reduction in the assumed discount rate. This was combined with the effect of increases in benefits under the terms of the plan in excess of current inflation rates. The net result was reflected as a reduction in accumulated other comprehensive income.
-Explain how the loss is reported in the financial statements (other than the balance sheet).

Accepted Answer

The loss is reported as a component of o...

Question 16

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

Accepted Answer

A)   Payroll taxes.
B)   Health insurance costs for current employees.
C)   Pension benefits.
D)   Sick pay and vacation pay.E) All of the above
F) C) and D)

Question 17

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

Accepted Answer

A)   Service cost, prior service cost, and gain on plan assets.
B)   Service cost, interest cost, and gain from revisions in pension liability.
C)   Service cost, contribution cost, and prior service cost.
D)   Service cost, interest cost, and expected return on plan assets.E) All of the above
F) A) and D)

Question 18

The balance of the plan assets can change due to:

Accepted Answer

A)   periodic service cost, accrued interest, revised estimates, plan amendments, and the payment of benefits.
B)   investment returns, employer contributions, and the payment of benefits.
C)   periodic service cost, accrued interest, revised estimates, employer contributions, and the payment of benefits.
D)   periodic service cost, employer contributions, and the payment of benefits.E) None of the above
F) A) and B)

Question 19

Compared to the ABO, the PBO usually is:

Accepted Answer

A)   Less material.
B)   Less representationally faithful.
C)   Less relevant.
D)   Less reliable.E) C) and D)
F) A) and B)

Question 20

The employer has an obligation to provide future benefits for:

Accepted Answer

A)   Defined benefit pension plans.
B)   Defined contribution pension plans.
C)   Defined benefit and defined contribution plans.
D)   None of these answer choices are correct.E) B) and C)
F) A) and D)

Exam 17: Pensions and Other Postretirement Benefits

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

Correct Answer
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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 projected benefit obligation?

Correct Answer
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The balance of the plan assets can change due to:

Correct Answer
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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. -Delayed recognition in earnings

Correct Answer
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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. -Vesting requirements

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

Correct Answer
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The loss is reported as a component of o...
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The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Correct Answer
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Which of the following statements typifies defined contribution plans?

Correct Answer
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Defined contribution pension plans that link the amount of contributions to company performance are often called:

Correct Answer
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If a pension plan is underfunded, the company has a net loss-OCI.

Correct Answer
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The three components of pension expense that are present most often are:

Correct Answer
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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. -APBO (postretirement)

Correct Answer
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The following information is related to the defined benefit pension plan of Dreamworld Company for the year: -Assuming no other relevant data exist, what is the pension expense for the year?

Correct Answer
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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?

Correct Answer
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Compared to the ABO, the PBO usually is:

Correct Answer
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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. -Service cost

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

Correct Answer
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The employer has an obligation to provide future benefits for:

Correct Answer
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Exam 17: Pensions and Other Postretirement Benefits

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

Correct AnswerverifiedShow Answer

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 projected benefit obligation?

Correct AnswerverifiedShow Answer

The balance of the plan assets can change due to:

Correct AnswerverifiedShow Answer

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. -Delayed recognition in earnings

Correct AnswerverifiedShow Answer

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. -Vesting requirements

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe loss is reported as a component of o...View AnswerShow Answer

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Correct AnswerverifiedShow Answer

Which of the following statements typifies defined contribution plans?

Correct AnswerverifiedShow Answer

Defined contribution pension plans that link the amount of contributions to company performance are often called:

Correct AnswerverifiedShow Answer

If a pension plan is underfunded, the company has a net loss-OCI.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. -APBO (postretirement)

Correct AnswerverifiedShow Answer

The following information is related to the defined benefit pension plan of Dreamworld Company for the year: -Assuming no other relevant data exist, what is the pension expense for the year?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Compared to the ABO, the PBO usually is:

Correct AnswerverifiedShow Answer

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. -Service cost

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The employer has an obligation to provide future benefits for:

Correct AnswerverifiedShow Answer

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The loss is reported as a component of o...
View Answer

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