ACCT 302 Read & Interact Spiceland, Nelson, & Thomas Chapter 17 solutions complete answers

ACCT 302 Read & Interact Spiceland, Nelson, & Thomas Chapter 17 solutions complete answers 

 

If benefits are fully vested,

 

Walden Company sponsors a pension plan. In its income statement, Walden should classify the related expense as a(n)

 

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

 

In an employer pension plan, some or all of the contributions to the retirement fund are often provided by the

 

Which of the following are advantages of defined contribution pension plans (as compared to defined benefit pension plans) for the employer?

 

The employer's obligation to pay retirement benefits in the future is a key element in

 

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

 

Correctly match the terms on the left with the correct description on the right.

 

For many companies, pension expense tends to be

 

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.

 

A defined        pension plan has less risk to the employer.

 

What is the term used for benefits employees have the right to receive even if their employment ceases?

 

The plan assets set aside by the employer are a key element in

 

The projected benefit obligation uses

 

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

 

The pension plan assets balance is reported

 

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 or false: Pension expense is part of other comprehensive income.

 

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

 

At the beginning of the year, Klein Company's pension plan showed pension plan assets of $4 million and a PBO of $4.5 million; unamortized prior service cost of $500,000; and no unamortized gains or losses. During the year, service cost was $310,000; $400,000 was paid to retirees; and the company contributed $340,000 to the plan. The expected return on plan assets was 8% and the discount rate estimate was 6%. The plan assets earned an actual return of 5%. The average remaining service period is 10 years. At the end of the year, the company's PBO relating this pension plan will be

 

Benefits that employees have the right to receive even if their employment were to cease are referred to as        benefits. (Enter only one word.)

 

Identify the components of pension expense.

 

Which of the following measures of the employer's pension obligation incorporates estimated future salary levels?

 

Amortization of pension-related gains ______ pension expense.

 

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

 

Murphy Company incurs a loss from changing a pension related assumption. This loss is

 

From an income statement perspective, pension expense represents

 

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. Dora Company's journal entry to record pension-related costs would include (Select all that apply.)

 

At the beginning of the year, Klein Company's pension plan showed pension plan assets of $4 million and a PBO of $4.5 million; unamortized prior service cost of $500,000; and no unamortized gains or losses. During the year, service cost was $310,000. The expected return on plan assets was 8% and the discount rate estimate was 6%. The plan assets earned an actual return of 5%. The average remaining service period is 10 years. The company should recognize pension expense for the current year of

 

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

 

Service cost, interest cost, the return on plan assets, prior service cost amortization, and net gain or loss amortization make up

 

Accumulated other comprehensive income is included in the _____ section of the balance sheet.

 

Austin Company has a net loss pension amortization amount of $500,000 in the current year. This amount will _____ pension expense.

 

In the financial statements, pension-related net gains or losses should be classified as

 

True or false: AOCI in the balance sheet is reported net of tax.

 

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.)

 

Serafin Company's balance sheet shows a pension asset of $550,000. Its notes indicate that, during the current year, the company contributed $470,000 to the pension fund and retirees received $400,000 in pension payments. From this information we can deduce that the pension plan is

 

Which of the following represent common reasons for the curtailment or settlement of defined benefit pension plans? (Select all that apply.)

 

AOCI is reported on

 

Which of the following are common benefits that are classified as postretirement benefits other than pensions?

 

Boone Company has a net gain pension amortization amount of $800,000 in the current year. This amount will _____ pension expense.

 

The annual cost of providing preretirement benefits

 

Gains and losses recognized as part of OCI and AOCI are

 

Correctly match the type of postretirement benefit obligation with the correct description.

 

Turner Company's balance sheet shows a pension liability of $150,000. Its notes indicate that, during the current year, the company contributed $450,000 to the pension fund and retirees received $420,000 in pension payments. From this information we can deduce that the pension plan is

 

What does the primary difference between accounting for pensions and for other postretirement benefits relate to?

 

When a pension plan is terminated,

 

The _____ of allocating prior service cost allocates prior service cost to each year in proportion to the fraction of the total remaining service years worked in each of those years.

 

Which of the following are common benefits that are classified as postretirement benefits other than pensions? (Select all that apply.)

 

The _____ aspect of providing _____ benefits creates an accounting issue.

 

The actuary's estimate of the total postretirement benefits, discounted to present value, expected to be received by plan participants is called

 

Measuring the        cost differs between accounting for pensions and for other postretirement benefits due to a difference in the way employees acquire benefits.

 

An approach for allocating prior service cost that reflects the declining service pattern is referred to as the        method. (Enter only one word.)

 

2.
401(k) profit-sharing plans and incentive savings plans
 
 
3.
Accumulated benefit obligation
 
 
4.
Administering terminated pension plans is one purpose of
 
 
5.
A(n) ______ is a professional trained in a particular branch of statistics and mathematics used to assess the various uncertainties related to a defined benefit pension plan. (Enter only one word.)
 
 
6.
At the beginning of the year, Klein Company's pension plan showed pension plan assets of $4 million and a PBO of $4.5 million; unamortized prior service cost of $500,000; and no unamortized gains or losses. During the year, service cost was $310,000; $400,000 was paid to retirees; and the company contributed $340,000 to the plan. The expected return on plan assets was 8% and the discount rate estimate was 6%. The plan assets earned an actual return of 5%. The average remaining service period is 10 years. At the end of the year, the balance of the pension plan assets will be
 
 
9.
At the company level, the size of a pension fund is typically reflected in the sponsoring company's
 
 
10.
The _______ benefit obligation is the most relevant as it includes estimated pay increases.
 
 
12.
Buddy Company started a defined benefit pension plan during the current year. The plan has a 5-year vesting period. The average age of the company's employees is 26 years; their expected retirement age is 60 years. The company should begin recognizing pension expense
 
 
13.
Byrd Company promised its employees a fixed percentage of their preretirement pay after retirement. Byrd sponsors a
 
 
14.
Calculating the effect of a retroactive plan amendment involving a change in the pension formula requires comparing the ______ (acronym) with and without the amendment.
 
 
15.
A company may hire an actuary to help it
 
 
16.
Decreases and increases in estimates of the PBO because of estimate revisions are called ______ and _____.
 
 
17.
The deferred recognition of pension-related gains and losses tends to
 
 
18.
A defined ________ pension plan guarantees a set amount will be put into the pension fund.
 
 
23.
Defined ________ pension plans use straightforward accounting that requires little explanation.
 
 
24.
Deviations from actuary estimates are referred to as
 
 
25.
During the current fiscal period, the pension fund sponsored by Green Corp. paid $50,000 in pension benefits to the company's current retirees. As a result of this payment, Green's PBO will
 
 
27.
ERISA established the following vesting periods: (Select all that apply.)
 
 
 
 
 
 
 
 
 
 
 
 
 

29.
Estimates made by actuaries with respect to defined benefit pension plans are
 
 
30.
The following information pertains to Abel Corporation's pension plan. PBO: 1/1/17: $6,000,000; 12/31/17: $6,600,000. The discount rate is 6% and the expected return on plan assets is 8% for the year ended December 31, 2017. The interest cost component of pension expense for 2017 will be
 
 
31.
The following information pertains to Carter Company's defined benefit pension plan: PBO beginning balance: $100,000; current year service cost: $8,000, interest cost: $10,000; actuarial gains: $2,000, employer contributions to plan: $10,000, payments to retirees: $5,000. The ending balance of the company's PBO is
 
 
32.
The following information relates to Bay Company's pension plan. Beginning balance in plan assets: $600,000; cash contributions to pension plan: $70,000; payments to retirees: $50,000; actual return on plan assets: $56,000; expected rate of return on plan assets: 8%; discount rate: 6%. The plan asset ending balance will be
 
 
33.
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
 
 
34.
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
 
 
35.
For a pension plan to be qualified for special tax treatment,
 
 
36.
fraction of the employees covered by pensions plans: 1/4
 
 
37.
fraction of the employees covered by pensions plans: 3/4
 
 
39.
The funded status of a defined benefit pension plan is determined by subtracting the fair value of the plan assets from the ________ benefit obligation.
 
 
40.
Gains and losses that occur due to revisions are
 
 
41.
Gerhard Company sponsors a defined benefit pension plan. At the end of the current fiscal year, the related pension plan assets have a fair value of $2 million, the ABO is $1.5 million, and the PBO is $2.2 million. Gerhard's pension plan is
 
 
42.
Grady Company estimates that its pension plan will earn a long-term expected rate of return of 8%. Suppose that due to a stock market boom, the company revises its estimate to 9%. Grady should probably
 
 
43.
Green Company sponsors a defined benefit pension plan. The pension formula is calculated based on the following formula: 1.5% x number of service years x final salary. The assumed discount rate is 5%. If an employee is expected to retire in 10 years with a final annual salary of $200,000, has earned 20 years of service, and is expected to receive an annual pension for 20 years, the current PBO rounded to the full dollar will be
 
 
44.
Greene Company sponsors a defined benefit pension plan. During the current year, the company retroactively changes the benefit formula from the current—1.5% x service years x final year's salary—to 1.8% x service years x final year's salary. As a result of this change, prior service cost will
 
 
 
 
 
 
 
 
 

45.
Helga Company sponsors a defined benefit pension plan. The beginning balance of plan assets is $1 million; the beginning balance of the PBO is $1.1 million; the expected rate of return is 9%, the discount rate is 7%, and the salary trend rate is 4%. The interest cost is equal to
 
 
48.
Identify the key elements associated with defined benefit pension plans. (Select all that apply.)
 
 
49.
In a defined benefit pension plan, the annual pension expense reflects changes in
 
 
50.
In a defined benefit plan, the ______ bear(s) the risk of achieving the retirement objective. In a defined contribution plan, the ______ bear(s) the risk of achieving the retirement objective.
 
 
51.
In a defined _____ pension plan, the employer records pension expense equal to the amount of the annual contribution.
 
 
53.
Increase in the PBO attributable to employee service during the current period is referred to as _________ cost. (Enter only one word.)
 
 
54.
The increase in the PBO attributable to employee service performed during the current year is referred to as _____ _____.
 
 
55.
The increase in the projected benefit obligation attributable to employee service during the current year is referred to as
 
 
56.
The increase in the projected benefit obligation attributable to employee work performed during the period is referred to as
 
 
57.
Interest cost is the discount rate times the PBO balance _____ of the year.
 
 
58.
Interest cost _____ the projected benefit obligation.
 
 
59.
In the financial statements, prior service cost should be classified as
 
 
60.
In which type of pension plan does the employee bear the risk of uncertain investment returns?
 
 
61.
Life expectancies and age at retirement are uncertainties related to funding which type of pension plan?
 
 
62.
A loss on PBO will _____ the PBO and prior service cost will _____ the PBO.
 
 
63.
Muller Company's actuary reports that the employees' life expectancy has risen an average of 0.57 years. As a result of this revised estimate
 
 
64.
Payment of retirement benefits _____ the PBO.
 
 
65.
The PBO balance at the beginning of the year is $100,000; service cost during the year is $10,000; interest cost is $9,000; and a loss of $4,000 was incurred due to a change in assumptions. Amortization of prior service cost was $5,000. The ending balance of the PBO will be
 
 
66.
The pension benefit obligation is reduced as
 
 
67.
Pension expense is part of
 
 
 
 
 
 
 
 
 

68.
The pension expense related to a defined benefit contribution plan is made up of changes that occur in
 
 
69.
A pension fund ______ accepts employer contributions, invests those contributions, and pays benefits to retired employees.
 
 
70.
A pension fund _______ can be an individual, a bank, or a trust company.
 
 
71.
The pension obligation and the plan assets are
 
 
72.
The pension obligation balance and the plan asset balance are reported
 
 
73.
Pension plan assets are commonly invested in which of the following? (Select all that apply.)
 
 
74.
Pension plan assets are netted with the PBO and a net pension ________ or _________ is reported on the employer's balance sheet.
 
 
75.
Pension plans that are established according to tight guidance and provide important tax advantages are called _______ plans
 
 
76.
The pension _______ reported in the income statement is made up of changes that occur in the pension obligation and the plan assets.
 
 
78.
________ plans often enhance productivity and reduce employee turnover in companies.
 
 
79.
_____ plans often enhance productivity and reduce employee turnover in companies.
 
 
80.
The present value of retirement benefits as of the retirement date is determined _____ the present value of retirement benefits as of the current date.
 
 
81.
Prior service cost _____ expensed as it is incurred and is included in _____.
 
 
82.
Prior service cost is recognized as pension expense
 
 
83.
Prior service cost typically is amortized straight-line over
 
 
84.
Projected benefit obligation
 
 
85.
The projected benefit obligation _____ each year by the amount of that year's service cost.
 
 
87.
The purposes of the PBGC are to (Select all that apply.)
 
 
88.
Recognizing pension expense during an employee's service years rather than during retirement represents an application of _______ the costs with the benefits provided.
 
 
89.
A relatively low expected return on plan assets means the employer should
 
 
91.
The _____ return is included in the calculation of pension expense.
 
 
92.
The ______ return on plan assets is an assumption made by management, and the ______ return on plan assets is the income on investments reported by the trustee.
 
 
93.
Select the two factors that must be compared to calculate prior service cost.
 
 
94.
Service cost, interest cost, and prior service cost amortization are all components of ________ expense.
 
 
 
 
 
 
 
 
 

96.
Service cost _____ the obligation to pay benefits.
 
 
97.
Setting vesting standards is a key purpose of
 
 
98.
Sheller Company estimates that its pension plan asset will earn a return of 10%. The beginning balance of plan assets was $500,000 and the ending balance was $560,000. During the year, the plan earned an actual return of 8%. As a result of this, pension expense will decrease by
 
 
99.
Smart Company revises an estimate resulting in an increase in the PBO. This revision results in _____ on PBO.
 
 
100.
Smith Company estimates that its pension plan will earn a return of 10%. The actual return is 7.5% This will result in
 
 
101.
Smith Company sponsors a defined benefit pension plan. The beginning balance of plan assets is $5 million; the beginning balance of the PBO is $5.5 million; the expected rate of return is 8%, the discount rate is 6%, and the salary trend rate is 4%. The interest cost is equal to
 
 
102.
Smith Corp. sponsors a 401(k) plan for all its full-time employees. The company contributes 3% of each employee's salary to the plan. Total payroll for the year was $2 million. When recognizing the employer's annual contribution, Smith should (Select all that apply.)
 
 
103.
Smith Corp. sponsors a 401(k) plan for all its full-time employees. The company contributes 5% of each employee's salary to the plan. Total payroll for the year was $1 million. When recognizing the cost associated with this pension plan, Smith should debit
 
 
104.
Smith Corp. sponsors a 401(k) plan for all its full-time employees. The company contributes 5% of each employee's salary to the plan. Total payroll for the year was $1 million. When recognizing the employer's annual contribution, Smith should credit
 
 
105.
steps necessary to calculate the projected benefit obligation
 
 
106.
Thrift plans, savings plans, and 401(k) plans are examples of typical defined _______ plans.
 
 
109.
Vested benefit obligation
 
 
110.
Violet Company sponsors a defined benefit pension plan. The pension formula is calculated based on the following formula: 2% x number of service years x final salary. The assumed discount rate is 5%. If an employee is expected to retire in 20 years with a final annual salary of $200,000, has earned 30 years of service, and is expected to receive an annual pension for 30 years, the current PBO rounded to the full dollar will be
 
 
 
 
 
 
 
 
 

111.
Vogel Company contributes 6% of its employees' annual salary to a pension plan. Vogel sponsors a
 
 
113.
When employees make contributions to the pension plan in addition to employer contributions, it is called a(n) _______ plan.
 
 
114.
When the PBO decreases due to a revised estimate, we have _____ on PBO.
 
 
115.
When the PBO _____ due to a revised estimate, we have a loss on PBO.
 
 
117.
Which of the following are common examples of defined contribution pension plans? (Select all that apply.)
 
 
118.
Which of the following are correct regarding ERISA? (Select all that apply.)
 
 
119.
Which of the following are methods of measuring the pension obligation? (Select all that apply.)
 
 
120.
Which of the following are often used in the pension formula of a defined benefit pension plan? (Select all that apply.)
 
 
121.
Which of the following are uncertainties related to funding a defined benefit pension plan? (Select all that apply.)
 
 
122.
Which of the following can cause a pension to be underfunded? (Select all that apply.)
 
 
123.
Which of the following components of pension expense also affects pension plan assets?
 
 
124.
Which of the following components of pension expense also affect the pension obligation? (Select all that apply.)
 
 
126.
Which of the following conditions must be met for a pension plan to qualify for special tax treatment? (Select all that apply.)
 
 
127.
Which of the following decreases a pension plan assets?
 
 
128.
Which of the following factors may change the balance of the PBO? (Select all that apply.)
 
 
129.
Which of the following factors may contribute to the recent popularity of defined contribution pension plans and decreasing popularity of defined benefit plans?
 
 
130.
Which of the following factors may contribute to the recent popularity of defined contribution pension plans and decreasing popularity of defined benefit plans?
 
 
131.
Which of the following factors may motivate employers to sponsor a pension plan? (Select all that apply.)
 
 
 
 
 
 
 
 
 

132.
Which of the following functions typically are performed by a pension plan trustee? (Select all that apply.)
 
 
133.
Which of the following ignores possible pay increases for employees?
 
 
134.
Which of the following is a common title for a pension tied to company performance?
 
 
135.
Which of the following is a similarity shared by defined benefit and defined contribution pension plans?
 
 
136.
Which of the following is true regarding qualified pension plans?
 
 
137.
Which of the following items is designed to provide income to individuals during retirement?
 
 
138.
Which of the following likely would cause gains or losses arising from changes in the PBO? (Select all that apply.)
 
 
139.
Which of the following may be an important cause of underfunded pension plans?
 
 
140.
Which of the following may be a valid justification for the deferred recognition of pension-related gains and losses?
 
 
141.
Which of the following parties contribute to a "contributory" pension plan? (Select all that apply.)
 
 
142.
Which of the following pension-related items is a component of both the balance of pension plan assets and the pension obligation?
 
 
143.
Which of the following reduces the projected benefit obligation?
 
 
144.
Which of the following represent a potential source of gains and losses associated with defined benefit pension plans? (Select all that apply.)
 
 
145.
Which of the following shows the correct calculation of the ending balance of pension plan assets?
 
 
146.
Which of the following statements is correct regarding a defined contribution pension plan?
 
 
147.
Which pension benefit obligation is the most representationally faithful?
 
 
148.
Which return is used to calculate pension expense?
 
 
149.
Which type of pension plan has less paperwork and is less costly to maintain?
 
 
150.
Which type of pension plan requires considerably more complex accounting treatment?
 
 
151.
Who bears the risk in a defined contribution pension plan?
 
 
 
 
 
 
 
 
 

 

1.
Accumulated benefit obligation...
 
 
8.
At the beginning of the year, Klein Company's pension plan showed pension plan assets of $4 million and a PBO of $4.5 million; unamortized prior service cost of $500,000; and no unamortized gains or losses. During the year, service cost was $310,000; $400,000 was paid to retirees; and the company contributed $340,000 to the plan. The expected return on plan assets was 8% and the discount rate estimate was 6%. The plan assets earned an actual return of 5%. The average remaining service period is 10 years. At the end of the year, the balance of the pension plan assets will be...
 
 
10.
At the company level, the size of a pension fund is typically reflected in the sponsoring company's...
 
 
13.
The __________ benefit obligation is the portion of benefits employees are entitled to regardless of continued employment.
 
 
15.
Buddy Company started a defined benefit pension plan during the current year. The plan has a 5-year vesting period. The average age of the company's employees is 26 years; their expected retirement age is 60 years. The company should begin recognizing pension expense...
 
 
16.
The cost of postretirement benefits is...
 
 
17.
Decreases and increases in estimates of the PBO because of estimate revisions are called __________ and __________.
 
 
19.
Defined ___________ pension plans promise fixed retirement benefits defined by a designated formula to employees after retirement.
Listen to the complete question
 
 
20.
During the current fiscal period, the pension fund sponsored by Green Corp. paid $50,000 in pension benefits to the company's current retirees. As a result of this payment, Green's PBO will...
 
 
21.
The employer's obligation, the plan assets, and the periodic expense of having the pension plan are key elements of a defined_____________ pension plan.
 
 
23.
The following information pertains to Abel Corporation's pension plan. PBO: 1/1/17: $6,000,000; 12/31/17: $6,600,000. The discount rate is 6% and the expected return on plan assets is 8% for the year ended December 31, 2017. The interest cost component of pension expense for 2017 will be...
 
 
24.
The following information pertains to Blum Company's defined benefit pension plan: PBO beginning balance: $100,000; current year service cost: $10,000, interest cost: $8,000; actuarial loss: $3,000, employer contributions to plan: $12,000, payments to retirees: $6,000. The ending balance of the company's PBO is...
 
 
25.
The following information pertains to Glen Company's defined benefit pension plan during the current year. Expected return on plan assets: $2,000; actual return: $3,000; employer contributions to the plan: $5,000; payment to retirees: $4,000. Glen's journal entry to record current period funding of its pension obligation should include a debit to plan assets for...
 
 
 
 
 
 
 
 
 
 
 
 
 

26.
The following information pertains to Pernell Company's pension plan. Beginning PBO: $500,000; current service cost $50,000; discount rate: 6%; contributions by Pernell: $40,000; benefits paid to employees: $25,000; loss on PBO: $5,000. The ending balance of the PBO will be...
 
 
27.
The following information pertains to Wald Corporation's pension plan. PBO: 1/1/17: $6,000,000; 12/31/17: $6,600,000. Pension plan assets: 1/1/17: $5,800,000; 12/31/17: 6,500,000. The discount rate is 5%. The interest cost component of pension expense for 2017 will be...
 
 
30.
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.)
 
 
31.
The following information relates to Bay Company's pension plan. Beginning balance in plan assets: $600,000; cash contributions to pension plan: $70,000; payments to retirees: $50,000; actual return on plan assets: $56,000; expected rate of return on plan assets: 8%; discount rate: 6%. The plan asset ending balance will be...
 
 
35.
Grady Company estimates that its pension plan will earn a long-term expected rate of return of 8%. Suppose that due to a stock market boom, the company revises its estimate to 9%. Grady should probably...
 
 
36.
Greene Company sponsors a defined benefit pension plan. During the current year, the company retroactively changes the benefit formula from the current—1.5% x service years x final year's salary—to 1.8% x service years x final year's salary. As a result of this change, prior service cost will...
 
 
38.
In a defined benefit pension plan, the annual pension expense reflects changes in...
 
 
40.
The increase in the PBO attributable to employee service performed during the current year is referred to as __________ __________
 
 
41.
The increase in the projected benefit obligation attributable to employee service during the current year is referred to as...
 
 
 
 
 
 
 
 
 

42.
The increase in the projected benefit obligation attributable to employee work performed during the period is referred to as...
 
 
43.
The interest cost associated with pension plans is determined by multiplying the beginning balance of the ______________ benefit obligation by the assumed discount rate. (Enter only one word.)
 
 
44.
The interest cost associated with pension plans is determined by multiplying the beginning balance of the __________ benefit obligation by the assumed discount rate. (Enter only one word.)
 
 
45.
Interest cost _____ the projected benefit obligation.
 
 
47.
In the financial statements, prior service cost should be classified as...
 
 
51.
Other comprehensive income items are reported...
 
 
52.
Payment of retirement benefits _____ the PBO.
 
 
53.
The PBO balance at the beginning of the year is $100,000; service cost during the year is $10,000; interest cost is $9,000; and a loss of $4,000 was incurred due to a change in assumptions. Amortization of prior service cost was $5,000. The ending balance of the PBO will be...
 
 
54.
Pension plan assets are netted with the PBO and a net pension ___________ or _____________ is reported on the employer's balance sheet.
 
 
56.
A pension-related gain will occur if the PBO is ______ than expected or if the return on plan assets is ______ than expected.
 
 
57.
A pension-related loss will occur if the PBO is ______ than expected or if the return on plan assets is ______ than expected.
 
 
59.
__________ plans often enhance productivity and reduce employee turnover in companies.
 
 
60.
Prior service cost _____ expensed as it is incurred and is included in _____.
 
 
61.
Prior service cost is recognized as pension expense...
 
 
62.
Prior service cost _____ the pension benefit obligation.
 
 
63.
Prior service cost typically is amortized straight-line over...
 
 
64.
The process of assigning the cost of benefits to the years during which those benefits are earned is referred to as...
 
 
 
 
 
 
 
 
 

65.
Projected benefit obligation...
 
 
66.
The projected benefit obligation _____ each year by the amount of that year's service cost.
 
 
68.
Recognizing pension expense during an employee's service years rather than during retirement represents an application of _______________ the costs with the benefits provided.
 
 
69.
A relatively low expected return on plan assets means the employer should...
 
 
71.
The _____ return is included in the calculation of pension expense.
 
 
72.
The ______ return on plan assets is an assumption made by management, and the ______ return on plan assets is the income on investments reported by the trustee.
 
 
74.
Service cost, interest cost, and prior service cost amortization are all components of ________ expense.
 
 
76.
Sheller Company estimates that its pension plan asset will earn a return of 10%. The beginning balance of plan assets was $500,000 and the ending balance was $560,000. During the year, the plan earned an actual return of 8%. As a result of this, pension expense will decrease by...
 
 
77.
Sheller Company estimates that its pension plan asset will earn a return of 10%. The beginning balance of plan assets was $500,000 and the ending balance was $560,000. During the year, the plan earned a return of 8%. This will result in a...
 
 
78.
Smart Company revises an estimate resulting in an increase in the PBO. This revision results in _____ on PBO.
 
 
80.
Smith Company estimates that its pension plan will earn a return of 10%. The actual return is 7.5% This will result in...
 
 
81.
''
The process of assigning the cost of benefits to the years during which those benefits are assumed to be earned by employees is referred to as...
 
 
 
 
 
 
 
 
 

86.
Vested benefit obligation...
 
 
87.
Vogel Company contributes 6% of its employees' annual salary to a pension plan. Vogel sponsors a...
 
 
89.
What is the most common postretirement benefit other than pensions?
 
 
91.
When the PBO decreases due to a revised estimate, we have _____ on PBO.
 
 
92.
When using the service method to allocate prior service cost, the amount amortized _____ over the years.
 
 
93.
Which of the following are accounted for the same way under other postretirement benefit plans and pension plans? (Select all that apply.)
 
 
96.
Which of the following are methods of measuring the pension obligation? (Select all that apply.)
 
 
97.
Which of the following are often used in the pension formula of a defined benefit pension plan? (Select all that apply.)
 
 
98.
Which of the following components of pension expense also affects pension plan assets?
 
 
99.
Which of the following components of pension expense also affect the pension obligation? (Select all that apply.)
 
 
101.
Which of the following factors may change the balance of the PBO? (Select all that apply.)
 
 
102.
Which of the following factors may motivate employers to sponsor a pension plan? (Select all that apply.)
 
 
103.
Which of the following is correct regarding the reporting for both pensions and postretirement benefits other than pensions?
 
 
 
 
 
 
 
 
 
 

104.
Which of the following items is designed to provide income to individuals during retirement?
 
 
106.
Which of the following pension-related items is a component of both the balance of pension plan assets and the pension obligation?
 
 
107.
Which of the following pension-related obligations is the APBO closely related to?
 
 
108.
Which of the following reduces the projected benefit obligation?
 
 
110.
Which of the following statements is correct regarding a defined contribution pension plan?
 
 
111.
Which of the following will increase the PBO? (Select all that apply.)
 
 
112.
Which return is used to calculate pension expense?
 
 
113.
Which type of pension plan has less paperwork and is less costly to maintain?
 
 
 

 

1.
Accumulated benefit obligation
 
 
3.
The actuary's estimate of the total post-retirement benefits, discounted to present value, expected to be received by plan participants is called
 
 
7.
The APBO is
 
 
13.
At the company level, the size of a pension fund is typically reflected in the sponsoring company's
 
 
15.
The __________ benefit obligation is the most relevant as it includes estimated pay increases.
 
 
16.
The __________ benefit obligation is the portion of benefits employees are entitled to regardless of continued employment.
 
 
19.
Buddy Company started a defined benefit pension plan during the current year. The plan has a 5-year vesting period. The average age of the company's employees is 26 years; their expected retirement age is 60 years. The company should begin recognizing pension expense
 
 
20.
Choose the best answer regarding the usefulness of a pension spreadhseet.
 
 
21.
Companies with sizeable unrecognized pension costs will exhibit a relatively high _____ earnings component.
 
 
22.
The composition of pension expense is reported
 
 
23.
Cook Company revises its pension formula causing an increase in prior service cost. The original amount was $50 million and the new amount is $60 million. In recording this revision, Cook will
 
 
24.
Decreases and increases in estimates of the PBO because of estimate revisions are called __________ and ________.
 
 
25.
A defined __________ pension plan guarantees a set amount will be put into the pension fund.
 
 
27.
The employer's obligation, the plan assets, and the periodic expense of having the pension plan are key elements of a defined __________ pension plan.
 
 
30.
The first numeric column in a pension spreadsheet typically shows the
 
 
 
 
 
 
 
 
 
 
 

31.
The following information pertains to Abel Corporation's pension plan. PBO: 1/1/17: $6,000,000; 12/31/17: $6,600,000. The discount rate is 6% and the expected return on plan assets is 8% for the year ended December 31, 2017. The interest cost component of pension expense for 2017 will be
 
 
32.
The following information pertains to Glen Company's defined benefit pension plan during the current year. Expected return on plan assets: $2,000; actual return: $3,000; employer contributions to the plan: $5,000; payment to retirees: $4,000. Glen's journal entry to record current period funding of its pension obligation should include a debit to plan assets for
 
 
33.
The following information pertains to Wald Corporation's pension plan. PBO: 1/1/17: $6,000,000; 12/31/17: $6,600,000. Pension plan assets: 1/1/17: $5,800,000; 12/31/17: 6,500,000. The discount rate is 5%. The interest cost component of pension expense for 2017 will be
 
 
37.
Greene Company sponsors a defined benefit pension plan. During the current year, the company retroactively changes the benefit formula from the current—1.5% x service years x final year's salary—to 1.8% x service years x final year's salary. As a result of this change, prior service cost will
 
 
39.
Identify the information that is typically directly available from a pension spreadhseet.
 
 
40.
Identify the key elements associated with defined benefit pension plans.
 
 
41.
In a defined benefit pension plan, the annual pension expense reflects changes in
 
 
43.
The increase in the PBO due to retroactively applying a plan amendment is referred to as ___________ __________ cost.
 
 
44.
The increase in the projected benefit obligation attributable to employee service during the current year is referred to as
 
 
45.
Interest cost is the discount rate times the PBO balance _________ of the year.
 
 
46.
The interest cost on the projected benefit obligation is found by multiplying what two amounts?
 
 
47.
Interest cost __________ the projected benefit obligation.
 
 
51.
Natch Company revises its estimate of future salary levels from $50 million to $60 million. In recording this revision, Natch will
 
 
52.
Other comprehensive income items are reported
 
 
 
 
 
 
 
 
 

53.
Payment of retirement benefits ________ the PBO.
 
 
54.
The pension benefit obligation is reduced as
 
 
56.
A pension spreadsheet typically shows the relationship between which of the following elements of a pension plan
 
 
57.
A pension spreadsheet typically shows the relationship between which of the following elements of a pension plan:
 
 
59.
Projected benefit obligation
 
 
60.
The projected benefit obligation _________ each year by the same amount of that year's service cost.
 
 
62.
Recognizing pension expense during an employee's service years rather than during retirement represents an application of __________ the costs with the benefits provided.
 
 
63.
The recourses a company will use to satisfy the pension obligation are referred to as pension ___________ ___________.
 
 
64.
The ________ return is included in the calculation of pension expense.
 
 
65.
The __________ return on plan assets is an assumption made by management, and the __________ return on plan assets is the income on investments reported by the trustee.
 
 
67.
Service cost, interest cost, and prior service cost amortization are all components of ________ expense.
 
 
69.
Service cost __________ the obligation to pay benefits.
 
 
70.
Sheller Company estimates that its pension plan asset will earn a return of 10%. The beginning balance of plan assets was $500,000 and the ending balance was $560,000. During the year, the plan earned an actual return of 8%. As a result of this, pension expense will decrease by
 
 
71.
Sheller Company estimates that its pension plan asset will earn a return of 10%. The beginning balance of plan assets was $500,000 and the ending balance was $560,000. During the year, the plan earned a return of 8%. This will result in a
 
 
73.
Smith Company estimates that its pension plan will earn a return of 10%. The actual return is 7.5%. This will result in
 
 
74.
Smith Company estimates that its pension plan will earn a return of 10%. The actual return is 7.5% This will result in
 
 
75.
Smith Company sponsors a defined benefit pension plan. The beginning balance of plan assets is $5 million; the beginning balance of the PBO is $5.5 million; the expected rate of return is 8%, the discount rate is 6%, and the salary trend rate is 4%. The interest cost is equal to
 
 
 
 
 
 
 
 
 

77.
True or false: Earnings quality is not affected by amounts reported in pension disclosures.
 
 
81.
Vested benefit obligation
 
 
82.
Walden company sponsors a pension plan. In its income statement, Walden should classify the related expenses a(n)
 
 
83.
What is the most common pos-tretirement benefit other than pensions?
 
 
84.
When a pension plan is terminated:
 
 
86.
When using the service method to allocate prior service cost, the amount amortized ________ over the years.
 
 
87.
Which of the components of pension expense is reported separately from other components of pension expense on the income statement?
 
 
89.
Which of the following are common benefits that are classified as post-retirement benefits other than pensions?
 
 
90.
Which of the following are reported in the balance sheet?
 
 
91.
Which of the following components of pension expense also affects the pension plan assets?
 
 
92.
Which of the following components of pension expense also affect the pension obligation?
 
 
93.
Which of the following components of pension expense reduce the expense?
 
 
94.
Which of the following factors may change the balance of the PBO?
 
 
95.
Which of the following ignores possible pay increases for employees?
 
 
96.
Which of the following pension-related items is a component of both the balance of pension plan assets and the pension obligation?
 
 
 
 
 
 
 
 
 

98.
Which of the following statements is correct regarding a defined contribution pension plan?
 
 
99.
Which return is used to calculate pension expense?
 
 
100.
Which type of pension plan has less paperwork and is less costly to maintain?