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Homework answers / question archive / Bakersfield College ACG 2021 1)The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability? A defined benefit plan only

Bakersfield College ACG 2021 1)The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability? A defined benefit plan only

Accounting

Bakersfield College

ACG 2021

1)The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability?

    1. A defined benefit plan only.
    2. A defined contribution plan only.
    3. Both a defined benefit and a defined contribution plan.
    4. This is not the correct entry.

 

 

 

 

  1. Which of the following is not a way of measuring the pension obligation?
    1. Accumulated benefit obligation.
    2. Vested benefit obligation.
    3. Retiree benefit obligation.
    4. Projected benefit obligation.

 

 

 

 

 

  1. The portion of the obligation that plan participants are entitled to receive regardless of their continued employment is called the:
    1. Vested benefit obligation.
    2. Retiree benefit obligation.
    3. Actual benefit obligation.
    4. True benefit obligation.

 

 

 

 

  1. ERISA made major changes in the requirements for pension plan:
    1. Vesting.
    2. Reporting.

 

    1. Taxing.
    2. Investing.

 

 

 

 

  1. Compared to the ABO, the PBO usually is:
    1. Less material.
    2. Less representationally faithful.
    3. Less relevant.
    4. Less reliable.

 

 

 

 

  1. Compared to the ABO, the PBO usually is:
    1. Larger.
    2. More reliable.
    3. Less relevant.
    4. More material.

 

 

 

 

  1. Consider the following:
  1. Present value of vested benefits at present pay levels.
  2. Present value of nonvested benefits at present pay levels.
  3. Present value of additional benefits related to projected pay increases.

 

Which of the above constitutes the accumulated benefit obligation?

  1. I & II.
  2. I, II, III.
  3. II & III.

 

  1. II only.

 

 

 

 

  1. Consider the following:
  1. Present value of vested benefits at present pay levels.
  2. Present value of nonvested benefits at present pay levels.
  3. Present value of additional benefits related to projected pay increases.

 

Which of the above constitutes the projected benefit obligation?

  1. III only.
  2. I, II.
  3. I, II, III.
  4. II only.

 

 

 

 

  1. Consider the following:
  1. Present value of vested benefits at present pay levels.
  2. Present value of nonvested benefits at present pay levels.
  3. Present value of additional benefits related to projected pay increases.

 

Which of the above constitutes the vested benefit obligation?

  1. I & II.
  2. I, II, III.
  3. II.
  4. I only.

 

 

 

 

  1. Interest cost will:
    1. Increase the PBO and increase pension expense.
    2. Increase pension expense and reduce plan assets.
    3. Increase the PBO and reduce plan assets.
    4. Increase pension expense and reduce the return on plan assets.

 

 

 

 

  1. The PBO is increased by:
    1. An increase in the average life expectancy of employees.
    2. Amortization of prior service cost.
    3. An increase in the actuary's assumed discount rate.
    4. A return on plan assets that is lower than expected.

 

 

 

 

  1. Payment of retirement benefits:
    1. Increases the PBO.
    2. Increases the ABO.
    3. Reduces the GBO.
    4. Reduces the PBO.

 

 

 

 

  1. A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2016. During 2016, pension 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 PBO at December 31, 2016, was:

a.     $225,000.

 

b.     $305,000.

c.     $331,500.

d.     None of these answer choices is correct.

 

 

 

 

  1. 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.

 

 

 

 

  1. Louie Company 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, $8,000. The discount rate applied by the actuary was 8%. What was the service cost for the year?

a.     $ 2,000.

b.     $12,000.

c.     $18,000.

d.     $92,000.

 

 

 

Use the following to answer questions :

 

The following information pertains to Havana Corporation's defined benefit pension plan:

 

($ in 000s)

2016

Beginning balances

2017

Beginning balances

Projected benefit obligation

($6,000)

($6,504)

Plan assets

5,760

6,336

Prior service cost–AOCI

600

552

Net loss–AOCI

    720

    786

At the end of 2016, Havana contributed $696 thousand to the pension fund and benefit payments of $624 thousand were made to retirees. The expected rate of return on plan assets was 10%, and the actuary's discount rate is 8%. There were no changes in actuarial estimates and assumptions regarding the PBO.

 

  1. What is the 2016 service cost for Havana's plan?
    1. $276 thousand.
    2. $528 thousand.
    3. $648 thousand.
    4. Cannot be determined from the given information.

 

 

 

 

  1. What is Havana's 2016 actual return on plan assets?
    1. $504 thousand.
    2. $618 thousand.
    3. $1,128 thousand.
    4. None of these answer choices is correct.

 

 

 

 

 

 

 

 

  1. What is Havana's 2016 gain or loss on plan assets?
    1. $115.2 thousand.
    2. $160.8 thousand.
    3. $276 thousand.
    4. None of these answer choices is correct.

 

 

 

 

  1. What is the 2016 pension expense for Havana's plan?
    1. $594 thousand.
    2. $606 thousand.
    3. $678 thousand.
    4. None of these answer choices is correct.

 

 

 

 

 

  1. An underfunded pension plan means that the:
    1. PBO is less than plan assets.
    2. PBO exceeds plan assets.
    3. ABO is less than plan assets.
    4. ABO exceeds plan assets.

 

 

 

 

  1. An overfunded pension plan means that the:
    1. PBO is less than plan assets.
    2. PBO exceeds plan assets.
    3. ABO is less than plan assets.
    4. ABO exceeds plan assets.

 

 

 

 

  1. Data for 2016 were as follows: PBO, January 1, $240,000 and December 31, $270,000; pension

 

plan assets (fair value) January 1, $180,000, and December 31, $230,000. The projected benefit obligation was underfunded at the end of 2016 by:

a.     $30,000.

b.     $60,000.

c.     $20,000.

d.     $40,000.

 

 

 

 

  1. Pension expense is decreased by:
    1. Amortization of prior service cost.
    2. Amortization of net gain.
    3. Benefits paid to retired employees.
    4. Prior service cost.

 

 

 

 

  1. Interest cost is calculated by multiplying the:
    1. ABO by the expected return on the plan assets.
    2. ABO by the discount rate.
    3. PBO by the expected return on plan assets.
    4. PBO by the discount rate.

 

 

 

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