ACCT 322 Exam 3 17-18

The ___________ benefit obligation is an estimate of the discounted present value of the retirement benefits earned so far by employees based on existing salary levels.

Accumulated

Which of the following are methods of measuring the pension obligation? (Select all that apply.)

Accumulated benefit obligation Projected benefit obligation Vested benefit obligation

Which of the following functions typically are performed by a pension plan trustee? (Select all that apply.)

Accumulates earnings on pension plan assets. Invests contributions to the pension plan. Pays funds to plan retirees. Accepts contributions to the pension plan.

Which of the following can cause a pension to be underfunded? (Select all that apply.)

Prior service cost from amending the pension plan Revising an estimate causing the PBO to increase

Which of the following is correct regarding the recognition of prior service costs under IFRS?

Prior service cost is expensed immediately on the income statement.

Which of the components of pension expense is reported separately from other components of pension expense on the income statement?

Service cost

Accumulated benefit obligation

The actuary's estimate of the present value of the total retirement benefit earned so far by employees based on existing compensation levels.

Which of the following are reported in the balance sheet?

The difference between the PBO and plan assets.

True or false: The accumulated benefit obligation, the vested benefit obligation, and the projected benefit obligation are all ways to measure the pension obligation.

True

At the end of the current fiscal period, Werner Corp. retroactively amends its pension plan. Estimated prior service cost of the amendment is $125,000. The average remaining service period of the company's employees is 10 years. Assuming that Werner properly applies IFRS, which of the following statements is correct?

Werner must expense $125,000 during the current year.

Smith Company adds its annual cash investment to plan assets in the amount of $5 million. The journal entry to record this includes

a credit to cash. a debit to plan assets.

The following information relates to Sand Company's defined benefit pension plan at December 31, the end of the reporting period. PBO: $5 million; plan assets: $5.8 million. On its balance sheet, Sand should show

a net pension asset of $800,000.

The following information relates to Tool Company's defined benefit pension plan at December 31, the end of the reporting period. PBO: $5 million; plan assets: $4.5 million. On its balance sheet, Tool Company should show

a net pension liability of $500,000.

The estimate of the total retirement benefits discounted to present value, earned so far by employees using existing compensation levels is the

accumulated benefit obligation.

Pension plan assets are netted with the PBO and a net pension _______ or______ is reported on the employer's balance sheet.

asset liability

The following information refers to O'Shea Company's defined benefit pension plan for the current year. Service cost: $5,000; interest cost: $2,000; amortization of prior service cost: $1,000; amortization of net loss: $500; expected return on plan assets: $3,000. O'Shea Company's journal entry to record pension-related costs would include (Select all that apply.)

credit to PBO of $7,000. debit to plan assets of $3,000.

The following information refers to O'Shea Company's defined benefit pension plan for the current year. Service cost: $5,000; interest cost: $2,000; amortization of prior service cost: $1,000; amortization of net loss: $500; expected return on plan assets: $3,000. O'Shea Company's journal entry to record pension-related costs would include: (Select all that apply.)

debit to pension expense for $5,500. credit to amortization of prior service cost—OCI for $1,000. credit to amortization of net loss—OCI for $500.

The following information refers to Dora Company's defined benefit pension plan for the current year. Service cost: $3,000; interest cost: $2,000; amortization of prior service cost: $700; amortization of net loss: $300; expected return on plan assets: $3,000. Recognition of pension expense will include (Select all that apply.)

debit to plan assets for $3,000. credit to PBO of $5,000.

The pension plan assets balance is reported

in the disclosure notes.

Identify the components of pension expense in a defined benefit plan. (Select all that apply.)

interest cost accrued on pension liability amortization of gains or losses service cost during the current period amortization of prior service cost expected return on plan assets

Which of the following are methods of measuring the pension obligation? (Select all that apply.)

low or negative actual returns on plan assets

Which of the following pension-related items is a component of both the balance of pension plan assets and the pension obligation?

payments to retirees

The resources a company will use to satisfy the pension obligation are referred to as pension ________ ________.

plan assets

Which of the following components of pension expense also affects pension plan assets?

return on plan assets

Which of the following components of pension expense also affect the pension obligation? (Select all that apply.)

service cost interest cost

Which of the following components of pension expense increase the expense? (Select all that apply.)

service cost during current period interest cost accrued on pension liability amortization of prior service cost amortization of losses

In a defined benefit pension plan, the annual pension expense reflects changes in

the pension obligation and the plan assets.

A pension ________ can be an individual, a bank, or a trust company.

trustee

A pension fund often_______________ accepts employer contributions invest those contributions, and pays benefits to retires employees.

trustee