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Exam 17: Pensions and Other Postretirement Benefits

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Question 21

Multiple Choice

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In a defined benefit pension plan, the journal entry to record the employer's annual cash contribution to plan assets:

A) reduces the employer's obligation to pay benefits
B) includes a credit to plan assets
C) might reduce next period's pension expense
D) includes a debit to cash

E) None of the above
F) A) and C)

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Question 22

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Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Prior service cost

A) Caused by plan amendment.
B) Causes a loss-other comprehensive income.
C) Causes a gain-other comprehensive income.
D) Caused by changes in assumptions used to measure the PBO.
E) Pension plan assets exceed the PBO.

F) A) and C)
G) A) and D)

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Question 23

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Prepare a list of how retiree health benefits differ from pension benefits with respect to accounting, funding, regulation, and employee benefits.

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -EPBO

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Overfunded pension plan

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Loss or (gain) on plan assets

Patey Technologies calculated pension expense for its underfunded pension plan as follows: Required: What is the effect of the components of pension expense on Patey's statement of comprehensive income?

A net pension asset is the excess of the projected benefit obligation over the plan assets.

Assume the actuary estimates the net cost of providing health care benefits to a particular employee during his retirement years to have a present value of $60,000. If the benefits relate to an estimated 25 years of service and five of those years have been completed:

To help assess the uncertainties that surround a defined benefit pension plan, corporations frequently hire a(n) :

In a postretirement health care plan, prior service cost is attributed to the service of active employees from the date of the amendment to:

The pension expense includes periodic changes that occur:

Which of the following is not a potential component of pension expense?

Amortizing a net gain for pensions and other postretirement benefit plans will:

Castillo Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $18,000; interest cost, $5,000; benefits paid for the year, $9,000; ending PBO, $89,000; the expected return on plan assets, $10,000; and cash deposited with pension trustee, $17,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a credit to the PBO for:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Amortize net loss-AOCI

The attribution period for postretirement health care plans does not include:

Waddle Company amended its defined benefit pension plan on January 1, 2018, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years. Required: 1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in 2018. 2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in 2018.

On December 31, 2018, the following pension-related data were available for CPS Industries' noncontributory, defined benefit pension plan: Required: 1) Prepare the 2018 journal entry to record pension expense. 2) How will the statement of comprehensive income be affected by any 2018 gains and losses?

The net postretirement benefit liability (APBO minus plan assets) is increased by: