Question: 1. A defined benefit pension plan was amended on 1/1/x4 to retroactively increase the pension benefits for employee service before this date. The actuary computed the present value of the increase in benefits to be $300,000. Twenty (20) employees are covered under the plan. It is estimated that these 20 employees will work another 300 years of service in total. 20x4 is the first year that PSC is amortized. By what amount is 20x4 OCI reduced as a result of this PSC grant and amortization? You can use either method to amortize PSC.

a. 300,000

b. 20,000

c. 280,000

d. 290,000

e. 0

2. 1/1/x7 data for a defined benefit pension plan follows. ____ PBO, $300,000. Plan assets at fair value, $240,000. The firm has no AOCI items as of 1/1/x7. Discount rate, 5%. Expected rate of return on plan assets, 6%. ___ 20x7 data: ____ SC, $45,000. Funding contribution (year-end), $60,000. Pension benefits paid, $35,000. Compute 20x7 pension expense.

a. 45,600

b. 45,000

c. 44,400

d. 35,000

e. 60,000

3. Data for a defined benefit pension plan that has a discount rate of 5% and expected rate of return of 6% follows. _____ At 12/31/x2: ___ PBO, $400,000. Assets at fair value, $300,000. _____ For 20x3: ____ SC, $50,000. Benefits paid, $80,000. Actual return on assets, $15,000. Amortization of PSC, $30,000. Compute PBO at 12/31/x3.

a. 410,000

b. 390,000

c. 360,000

d. 380,000

e. 420,000

4. A tech firm sponsors a defined contribution pension plan for qualified employees. The firm contributes 4% of annual gross salary to the fund of the employee's choice, but the employee must also contribute 2% of gross salary. For 20x4, the total gross pay of employees participating in the plan was $1,000,000. During 20x4, the firm paid a total of $45,000 to the fund. This amount included $8,000 to eliminate a shortfall from 20x3. What amount is reported for 20x4 pension expense?

a. 45,000

b. 37,000

c. 46,000

d. 40,000

e. 60,000