Pas 26 Flashcards
What does PAS 26 apply to?
A. The preparation of financial statements of employers
B. The preparation of financial statements of retirement benefit plans
C. The reporting of individual employee benefits
D. Government social security arrangements
B
How does PAS 26 view a retirement benefit plan?
A. As part of an employer’s financial statements
B. As a reporting entity separate from the employers of the participants
C. As an expense in an employer’s income statement
D. As a government-regulated entity
B
What does PAS 26 deal with in terms of reporting?
A. Individual employees’ retirement benefits
B. Accounting and reporting by the plan to all participants as a group
C. Taxation of pension plans
D. Investment management of pension funds
B
To what types of retirement benefit plans does PAS 26 apply?
A. Only formal and contributory plans
B. Only funded plans managed by a trustee
C. All retirement benefit plans, whether formal or informal, contributory or non-contributory
D. Only defined benefit plans
C
How are hybrid retirement plans classified under PAS 26?
A. As defined contribution plans
B. As government-regulated plans
C. As defined benefit plans
D. As non-pension plans
C
What does PAS 26 not apply to?
A. Defined benefit plans
B. Defined contribution plans
C. Government social security arrangements
D. Hybrid retirement plans
C
What is funding in the context of PAS 26?
A. Employer contributions to employees’ salaries
B. The transfer of assets to an entity separate from the employer to meet future retirement obligations
C. Government subsidies for pension plans
D. The process of calculating pension liabilities
B
Under a defined contribution plan, what determines the benefits received by employees?
A. The employer’s financial position
B. Contributions and investment income of the fund
C. Government regulations
D. The actuarial valuation of promised benefits
B
What financial statements must a defined contribution plan contain?
A. Statement of cash flows and balance sheet
B. Statement of net assets available for benefits, statement of changes in net assets, and accompanying notes
C. Employer’s income statement
D. Actuarial valuation report
B
Under a defined benefit plan, what determines the benefits received by employees?
A. The plan formula
B. Employer contributions
C. Market interest rates
D. Employee contributions
A
How is the actuarial present value of promised retirement benefits reported in a defined benefit plan?
A. It is only disclosed in employer financial statements
B. It must be reported either in the financial statements or referenced in an actuarial report
C. It is not required to be reported
D. It is only calculated upon retirement of employees
B
What are vested benefits?
A. Benefits that are conditional on continued employment
B. Benefits that employees receive only after retirement
C. Benefits whose rights are not conditional on continued employment
D. Benefits that are entirely employer-funded
C
How often are actuarial valuations typically prepared?
A. Annually
B. Every three years
C. Every five years
D. Upon employee retirement
B
How are plan assets measured?
A. At historical cost
B. At fair value or market value
C. Based on employer estimates
D. At the book value of the employer
B
What disclosures are required in the financial statements of retirement benefit plans?
A. Only a statement of net assets
B. Only contributions and investment performance
C. Summary of accounting policies, plan details, investment details, and actuarial present value of promised benefits
D. No additional disclosures are required
C
True or False- PAS 26 applies to the preparation of financial statements of retirement benefit plans.
TRUE
True or False - PAS 26 considers a retirement benefit plan as part of an employer’s financial statements.
False (PAS 26 views a retirement benefit plan as a separate reporting entity.)
True or False - PAS 26 deals with the accounting and reporting by the plan to all participants as a group, not individually.
TRUE
True or False - PAS 26 applies only to formal and contributory retirement benefit plans.
False (PAS 26 applies to all retirement benefit plans, whether formal or informal, contributory or non-contributory.)
True or False - Hybrid retirement plans under PAS 26 are considered defined benefit plans.
TRUE
True or False - PAS 26 applies to government social security arrangements.
False (PAS 26 does not apply to government social security arrangements.)
True or False - Funding refers to transferring assets to a separate entity to meet future retirement benefit obligations.
TRUE
True or False - In a defined contribution plan, an employer’s obligation is discharged by making agreed contributions.
TRUE
True or False - The benefits received in a defined contribution plan depend on the employer’s financial status.
False (The benefits depend on contributions and investment income.)
True or False - A defined benefit plan guarantees specific benefits to employees based on a formula.
TRUE
True or False - In a defined benefit plan, the employer’s obligation is discharged once contributions are made.
False (The employer’s obligation continues until the promised benefits are fully paid.)
True or False - The actuarial present value of promised retirement benefits must always be included in the financial statements of a defined benefit plan.
False (It can be reported in the financial statements or referenced in an actuarial report.)
True or False - Vested benefits are conditional on continued employment.
False (Vested benefits are not conditional on continued employment.)
True or False - Actuarial valuations are typically prepared every three years.
TRUE
True or False - Plan assets must be measured at fair value or market value.
TRUE
True or False - Defined contribution plans require financial statements that include a statement of net assets available for benefits and a statement of changes in net assets.
TRUE
True or False - In defined benefit plans, the availability of earmarked funds does not affect the payment of benefits.
False (The payment of benefits depends on earmarked funds and the employer’s ability to cover any shortfall.)
True or False - Financial statements of retirement benefit plans must disclose details of investments exceeding 5% of net assets.
TRUE
True or False - The present value of retirement benefits can be calculated using only current salary levels.
False (It can be calculated using either current salary levels or projected salary levels at retirement.)
True or False - PAS 26 requires disclosure of administrative, tax, and other expenses related to the retirement benefit plan.
TRUE
