ACG4111 Exam 2 Review: Chapter 16 Pensions

Question 1

The employer has no obligation to provide future benefits for

Answer 1

Defined contribution pension plans

Question 2

The portion of the obligation that plan participants are entitled to actually received regardless of their continued employment is called

Answer 2

Vested benefit obligation

Question 3

IFRS does allow deferring recognition of the following:

Answer 3

PBO assumptions which result in OCI losses and gains and prior service cost

Question 4

Amortizing a net loss-AOCI for pensions will have the following impact on the components of the shareholders equity

Answer 4

Decrease retained earnings and increased total AOCI in the balance sheet

Question 5

Pension expense decreased by

Answer 5

Amortization of net gain

Question 6

Calculate service costs for the year

Answer 6

Ending PBO + benefits paid to retirees - interest costs - beginning PBO (calculated as interest costs / interest rate) = service costs

Question 7

Calculate ending PBO at year end (McDonald Co’s)

Answer 7

Beginning PBO + (beginning PBO * rate) + service costs - pension benefits paid

Question 8

The component of pension expense that results from amending a pension plan to give recognition to previous service of currently enrolled employees is the amortization of

Answer 8

Prior service costs

Question 9

Calculate amount of amortization to pension expense for the year (a company has net-gain-AOCI of)

Answer 9

(((Higher of either PBO or plan assets) * 10%) - net gain-AOCI) / remaining years

Question 10

Ryan Company maintains a defined benefit pension plan for its employees. For the fiscal year ended December 31 of the current year, it reported a pension liability. This liability is the amount by which

Answer 10

Projected benefit obligation exceeds the fair value of plan assets

Question 11

Calculate pension expense (Jinx’s plan)

Answer 11

Service cost + interest cost (beg. PBO*interest cost) - expected return (beg. plan asset * expected return rate) + amortization per year - (net gain-AOCI / service period remaining)

Question 12

Calculate balance of plan assets at year end (Jinx’s plan)

Answer 12

Beg. PBO - (beg. PBO + service cost + interest cost + loss on PBO - end. PBO)

Question 13

Calculate of net gain-AOCI at year end (Jinx’s plan)

Answer 13

Net gain-AOCI + actual return on plan assets - expected return - amortization of gain -AOCI

Question 14

Calculate actual return on plan assets

Answer 14

End. fair value of plan assets - beg. fair value of plan assets + employer contributions - benefits paid

Question 15

Journal entry to record payment to retirees

Answer 15

Debit PBO of payment

Question 16

A new prior service cost incurred at end of current year will result in

Answer 16

Increase to pension expense

Question 17

The aggregate journal entry recorded at year-end to record annual pension expense will not include

Answer 17

A credit to service cost

Question 18

Journal entry to record the effect of increasing estimate of future salary levels to estimate PBO

Answer 18

Debit to loss-OCI and credit to PBO

Question 19

Accounting for postretirement health care benefits is similar, in most respects, to accounting for

Answer 19

Pension benefits

Question 20

Calculate APBO at year end

Answer 20

Beg. APBO Z+ service cost + interest cost (Beg. APBO * discount rate) - retirement benefits paid