Financial 6

Question 1

What is the formula for expected return on plan assets?

Answer 1

Beginning FV of plan assets x expected rate of return on plan assets = expected return on plan assets

Question 2

Formula for funded status?

Answer 2

Fair Value of plan assets - PBO = Funded status

Question 3

What is the formula to calculate Amortization of unrecognized of prior service cost?

Answer 3

Beginning unrecognized prior service cost / Average remaining service life = Amortization of prior service cost

Question 4

How do you calculate the gain or loss?

Answer 4

Beginning of year Unrecognized gain or loss - 10% of PBO or market related value (greater) = Excess / Average remaining service life = Amortization of unrecognized gain or loss

Question 5

What is the formula for the amortization of rusting net obligation or net asset at implementation?

Answer 5

Projected benefit plan - fair value plan assets = initial unfunded obligation / 15 years OR average employee job life (greater) = minimum amortization

Question 6

What is the formula to calculate the PBO?

BASE

Answer 6

Beginning PBO
+ service costs
+ Interest Costs
+ prior service cost from current period plan amendments
+actuarial losses incurred in the current period
- Actuarial gains incurred in the current period
- Benefits paid to retirees
= Ending PBO

Question 7

What is the formula to FV of plan assets or actual return on plan assets?

BASE

Answer 7

Beg. FV of plan assets
\+ Contributions
\+ Actual return on plan assets
- Benefits paid to retirees
= Ending FV of plan assets

Question 8

What is the INCOME STATEMENT FORMULA?

SIR AGE

Answer 8

Current Service Cost
\+ Interest Costs
- Return on plan assets
\+ Amortization or prior Service Cost
- Gains
\+ Losses
\+ Amortization of Existing Net Obligation or net asset
= Net Periodic Pension Cost

Question 9

Formula for unrecognized OCI?

Answer 9

Per homework problem

Beg unrecognized prior service cost  
- Amortization or prior Service cost  
= End unrecognized prior service cost
X (1-expected tax rate)
= Accumulated OCI

Question 10

The statement of Financial Position is also known as

Answer 10

Balance Sheet

Question 11

Visor company maintains a defined benefit pension plan for its employees. US GAAP, The service cost component of Visor net periodic pension cost is measured using the

Answer 11

Projected benefit obligation PBO

Question 12

Under US GAAP, what is the present value of all the future retirement payments attributed by the pension benefit formula to employee services rendered prior to the date and based on the past and current compensation levels only

Answer 12

Accumulated benefit obligation

Question 13

Under US GAAP, interest cost included in the net pension cost recognized for a period by an employer sponsoring a defined benefit pension plan represents the:

Answer 13

Increase between the expected and actual returns on plan assets.

Question 14

Under current GAAP, which approach is used to determine income tax expense?

Answer 14

Asset and Liability Approach

Question 15

Income tax expense=

Answer 15

Taxable income X tax rate

Question 16

Deferred income tax expense =

Answer 16

Temporary differences X future tax rate

Question 17

Deferred income tax liability =

Answer 17

Future tax rate X future taxable amounts

Or

Difference of book value and Tax X tax rate

Question 18

Justification for the method of determining periodic deferred tax expense is based on the concept of:

Answer 18

Recognition of assets and liabilities

Question 19

What is the formula for interest cost?

Answer 19

Beginning of period PBO x Discount Rate = interest cost