13 D Wrong Answers

Question 0

Where is other comprehensive income closed to?

Answer 0

Accumulated other comprehensive income

Question 1

What is the journal entry when a pension is underfunded?

Answer 1

Other comprehensive income. Xxx

Accrued pension liability. Xxx

Question 2

What is the journal entry to record a pension expense?

Answer 2

Pension expense. Xxx

Accrued liability. Xxx

Question 3

What is the journal entry when a payment is made and the pension in overfunded?

Answer 3

Prepaid pension expense. Xxx
Pension expense. Xxx
Cash. Xxx

Question 4

Year end PBO calculation (that’s not footnote disclosure)

Answer 4

Beginning PBO
\+ service cost
\+ interest cost
- benefits paid
\_\_\_\_\_\_\_\_\_\_\_\_\_
= Year end PBO

Question 5

End of year PBO calculation that’s a footnote disclosure

Answer 5

Includes all components in calculation (unlike financial statement
Figure)

Question 6

Which of the following are required disclosures for defined benefit plans?
1 the weighted average discount rate

2 the estimates of future contributions for the next 5 years

Answer 6

Weighted average discount rate is required

The estimates of future contributions for the next 5 years is
Not required

Question 7

The assumed discount rate should reflect rates which pension benefits could be…

2) what is this rate referred to as?

Answer 7

Effectively settled

2) settlement rate

Question 8

To determine the settlement rate (discount rate of pension benefits), it is appropriate to look at…

Answer 8

Rates implicit in current prices of annuity contracts that could be
Used to settle obligation under defined benefit plan

Question 9

Is the discount rate used to calculate the projected benefit obligation determined by a) expected return on plan assets of b) actual return on plan assets?

Answer 9

Neither

Question 10

Recognized pension liability calculation

Answer 10

Recognized pension liability = pension cost - pension contribution

Question 11

Out of the 3 below, which of the following must be disclosed in defined benefit pension plans?
1 assumed discount rate
2 expected long term rate of return on all the employer’s assets
3 rate of compensation increase

Answer 11

Assumed discount rate and rate of compensation increase

Must be included

Question 12

In a defined benefit plan, rates for assumed discount rate of compensation increase and expected long term rate of return on plan assets. Should this be disclosed in the notes?

Answer 12

Yes should be disclosed

Question 13

In a company’s defined benefit pension plan, a reconciliation of the accrued or prepaid pension cost reported in its balance sheet with the pension expense reported in its income statement. Should this be disclosed in the notes?

Answer 13

Not required to disclose