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Exam 17: Pensions and Other Postretirement Benefits

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Question 101

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Discuss income smoothing as the term relates to pension plans.

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Gains and losses can occur when either t...

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Question 102

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Mars Inc.has a defined benefit pension plan.On December 31 (the end of the fiscal year) ,the company received the PBO report from the actuary.The following information was included in the report: ending PBO,$110,000;benefits paid to retirees,$10,000;interest cost,$7,200.The discount rate applied by the actuary was 8%.What was the beginning PBO?

A) $ 90,000.
B) $100,000.
C) $107,200.
D) $112,000.

E) None of the above
F) All of the above

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Question 103

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What is the theoretical and practical trade-off when measuring the pension liability using the projected benefit obligation compared to the accumulated benefit obligation?

Lasagna Corporation has a defined benefit pension plan.Lasagna received the following information for the current calendar year: The expected long-term return on plan assets is 10%.There were no other relevant data for the year. Required: 1)Determine Lasagna Corporation's pension expense for the year. 2)Prepare the journal entries to record the pension expense and funding for the year.

According to generally accepted accounting principles,accounting for postretirement benefits other than pensions must adhere to the:

Pension data for Matta Corporation include the following for the current calendar year: Required: Assuming no change in actuarial assumptions and estimates,determine the service cost component of pension expense for the current year.

DeAngelo Yards,Inc. ,calculated pension expense for its underfunded pension plan as follows: Required: Which elements of DeAngelo's balance sheet are affected by the components of pension expense? What are the specific changes in these accounts?

Travis Transportation reported a net loss-AOCI in last year's balance sheet.This year,the company revised its estimate of future salary levels causing its PBO estimate to decline by $12.Also,the $24 million actual return on plan assets was less than the $27 million expected return. Required: 1)Prepare the appropriate journal entries to record the gain and loss. 2)How do this gain and loss affect Travis' income statement,statement of comprehensive income,and balance sheet?

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

Interest cost will:

The component of pension expense that results from amending a pension plan to give recognition to previous service of currently enrolled employees is the amortization of:

At December 31,2015,Mongo,Inc. ,reported in its balance sheet a net loss of $3 million related to its pension plan.The actuary for Mongo at the end of 2016 increased her estimate of future salary levels.Mongo's entry to record the effect of this change will include:

The projected benefit obligation may be less reliable than the accumulated benefit obligation.

A company's postretirement health care benefit plan had an APBO of $265,000 on January 1,2016.During 2016,retiree benefits paid were $40,000.The discount rate for the plan for this year was 10%.Service cost for 2016 was $80,000.Plan assets (fair value) increased during the year by $45,000.The amount of the APBO at December 31,2016,was:

What is Havana's 2016 actual return on plan assets?

Pension data for Sam Adams Inc.include the following for the current calendar year: Discount rate,8% Expected return on plan assets,10% Actual return on plan assets,9% Service cost,$400,000 Required: 1)Determine pension expense for the year. 2)Prepare the journal entries to record pension expense and funding for the year.