1. ...likely to change the FMV of pension plan assets during a given period

(*) employer cash payments are made to the plan trustee
(*) retirement benefits paid
(*) actual returns on invested plan assets

2. gorilla, corp. implemented a defined-benefit pension plan for its employees on January 2, 2012.
   
   The following data are provided for year 2012, as of December 31, 2012.
   
   Project benefit obligation = 70,000
   Employer's contribution at year end = 60,000
   
   What amount should Gorilla record as additional minimum pension liability at December 31, 2012.

PBO > Employer's contribution at year end

= plan is UNDERFUNDED

NET OBLIGATION

3. PBO < Employer's contribution at year end

= plan is OVERFUNDED

NET ASSET

4. regarding actuarial assumptions, what 3 things must firms disclose in notes to financial statements?

(1) discount rate used to compute the pension benefit obligation
(2) expected rate of return on pension investments
(3) rate of compensation increase, which affects the amount of PBO

5. pension plan formula...
   
   annual benefits =

annual credit years of service salary at retirement date

6. when is a minimum liability for pension expense reported?

the projected benefit obligation exceeds the fair value of the pension plan assets

7. derivatives are...

financial instruments that derive their value from changes in

(*) stock prices
(*) commodity prices
(*) interest rates

8. Average Tax Rate =

Income Tax Expense
/ Book Income before Income Taxes

9. why restate LIFO to FIFO?

(*) LIFO inventory valuation results in low out-of-date inventory values, reflecting poor accounting information quality

(*) inventory turnover ratio based on LIFO gives poor indication of the actual inventory turnover

(*) LIFO measure of the inventory turnover ratio does not accurately portray the number of days inventories are held if LIFO costs are very old

10. what is LIFO layer liquidation?

(*) is an exception to the generalization that LIFO produces the lowest net income during periods of rising prices

(*) occurs when a firm sells more units during a period than it purchases

(*) LIFO assigns the cost of all current period's purchases plus costs assigned to the liquidated LIFO layers to COGS

(*) during periods of rising prices, the liquidated layers of LIFO may be lower than current costs, causing COGS to be relatively low and net income relatively high

11. LIFO

(*) assigns amounts to cost of goods sold closest to current replacement cost of inventory

(*) results in highest cost of goods sold and lowest net-income of all three methods in a period of rising prices

(*) if preferred by firms for income tax purposes