Assignment
1. If the actual return on plan assets is positive, then it is subtracted from the annual pension expense.
True
False
2. The unrecognized net gain or loss balance must be amortized when it exceeds 10% of the larger of the:
ending accumulated benefit obligation or the market-related asset value.
beginning accumulated benefit obligation or the market-related asset value.
beginning projected benefit obligation or the market-related asset value.
ending projected benefit obligation or the market related asset value
3. The accumulated benefit obligation measures
the pension obligation on the basis of the plan formula applied to all years of employee service, both vested and nonvested, to date and based on current salary levels.
the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
the shortest possible period for funding to maximize the tax deduction.
4. Amortization of prior service cost generally decreases pension expense.
True
False
5. The following information is related to the pension plan of Gamekeeper, Inc. for 2017:
|
Actual return on plan assets
|
$335,000
|
|
Amortization of net gain
|
132,000
|
|
Amortization of prior service cost due to increase in benefits
|
240,000
|
|
Expected return on plan assets
|
368,000
|
|
Interest on projected benefit obligation
|
580,000
|
|
Service cost
|
1,295,000
|
Pension expense for 2017 is
$1,894,000.
$1,927,000.
$1,615,000.
$1,165,000.
6. The ending balance in the Pension Asset/Liability column should equal the
balance of the Projected Benefit Obligation.
net balance in the memo record at year end.
balance of the Accumulated Pension Obligation.
balance of the Plan Assets.
7. The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets.
|
Corridor
|
Expected Return on Plan Assets
|
|
1.
|
Yes
|
Yes
|
|
2.
|
Yes
|
No
|
|
3.
|
No
|
Yes
|
|
4.
|
No
|
No
|
1
2
3
4
8. The unexpected gains or losses that result from changes in the projected benefit obligation are called
|
Asset Gains and Losses
|
Liability Gains and Losses
|
|
1)
|
Yes
|
Yes
|
|
2)
|
No
|
No
|
|
3)
|
Yes
|
No
|
|
4)
|
No
|
Yes
|
3
4
2
1
9. All of the following statements regarding the accounting for various forms of compensation plans under IFRS are true except:
Under IFRS, the net defined benefit liability (asset) is the deficit or surplus related to the defined benefit pension plan.
Remeasurements, under IFRS, are gains and losses related to the defined benefit obligation and gains and losses on the fair value of the plan assets.
IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans.
IFRS does not recognize prior service costs on the balance sheet, but instead expenses them in the current period.
10. When preparing the journal entry with a plan amendment, if the pension liability exceeds the unrecognized prior service cost:
the Additional Pension Liability account is credited for the amount of the unrecognized prior service cost.
the excess is debited to Other Comprehensive Income (PSC).
no entry is necessary to record the liability.
the Additional Pension Liability account is decreased.