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1.

Question :

(TCO C) Presented below is pension information related to Woods, Inc. for the year 2013. Service cost Interest on projected benefit obligation $47,000 Interest on vested benefits $24,000 Amortization of prior service cost due to increase in benefits $12,000 Expected return on plan assets $18,000 The amount of pension expense to be reported for 2013 is $76,000

Student Answer:

$159,000. $117,000. $105,000. $141,000.


Instructor Explanation: See Chapter 20. 76000 + 47000 + 12000 - 18000

Points Received: Comments:

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2.

Question : Student Answer:

(TCO C) A pension liability is reported when the fair value of the pension assets is less than the projected benefit obligation. the fair value of the pension assets is greater than the accumulated benefit obligation. the contributions for the period are less than the pension expense for the same period. the fair value of the pension plan is less than the accumulated other comprehensive income.

Instructor Explanation:

See Chapter 20.


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Points Received: Comments:

3.

Question : Student Answer:

(TCO C) Post-retirement benefits may include all of the following except tuition assistance. dental care. severance pay to laid-off employees. legal and tax services.

Instructor Explanation:

See Chapter 20.


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Points Received: Comments:

4.

Question :

(TCO C) Kathy's Kittens, Inc. has provided the following info for their postretirement benefits plan for 2013. Service cost $550,000 Discount rate 9% APBO, January 1, 2013 $4,300,000 EPBO, January 1, 2013 $4,800,000 Average remaining service to full eligibility 20 years Average remaining service to expected retirement 25 years The amount of post-retirement expense for 2013 is

Student Answer:

$1,152,000. $1,109,000. $982,000. $937,000.


Instructor Explanation:

See Chapter 20. 550000 + (4300000 * 0.09)


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Points Received: Comments:

5.

Question :

(TCO C) On January 1, 2013, Laura's Living Company has the following defined benefit pension plan balances. Projected benefit $5,700,000 obligation

Fair value of plan assets

7,200,000

The interest (settlement) rate applicable to the plan is 10%. On January 1, 2014, the company amends its pension agreement so that service costs of $350,000 are created. Other data related to the pension plan are as follows. 2013 Service costs Prior service costs amortization Contributions (funding) to the plan Benefits paid Actual return on plan assets Expected rate of return on assets 2014

$150,000 $165,000 $0 $63,000

$168,000 $194,000 $190,000 $220,000 $576,000 $498,000

8%

7%

Required: (a) Prepare a pension worksheet for the pension plan for 2013 and 2014. (b) For 2014, prepare the journal entry to record pension-related amounts.
Student Answer: Instructo See Chapter 20. r Explanat (a) Prepare a pension worksheet for the pension plan for 2013 and 2014. ion:

Items Balance, Jan. 1, 2013 - Service cost - Interest cost - Actual return

LAURA'S LIVING COMPANY Pension Worksheet2013 and 2014 General Journal Entries Memo Record OCI Annual OCI Pension Projected Prior Plan Pension Cash Gain/Los Asset/ Benefit Service Assets Expense s Liability Obligation Cost 1,500,000 (5,700,000 7,200,000 ) 150,000 (150,000) 570,000 (570,000) (576,000 576,000

) - Contributions - Benefits Journal entry, 12/31/13 Accum OCI, 12/31/12 Balance, Dec. 31, 2013 - Additional PSC January 1, 2014 - Service cost - Interest cost - Actual return - Unexpected loss - Amortization of PSC - Contributions (168,000 ) 144,000 (168,000 ) 0 0 24,000 168,000 190,000 (190,000)

250,000

165,000 648,000 (498,000 ) (44,780) 63,000 (194,000 )

1,524,000 (6,230,000 7,754,000 ) (250,000) (6,480,000 ) (165,000) (648,000) 498,000 44,780

(63,000) 194,000

- Benefits 220,000 (220,000) Journal entry, 333,220 (194,000 187,000 44,780 (371,000) 12/31/14 ) Accum OCI, 0 0 12/31/13 Balance, Dec. 31, 187,000 44,780 1,153,000 (7,073,000 8,226,000 2014 ) 2013 Interest cost = $5,700,000 10% settlement rate = $570,000. 2014 Interest cost = $6,480,000 10% settlement rate = $648,000. 2014 Unexpected loss = ($7,754,000 7% expected return on assets in 2012) - $498,000 actual return on plan assets in 2014 = $44,780.

(b) For 2014, prepare the journal entry to record pension-related amounts. Pension Expense 333,220 Other Comprehensive 187,000 Income (PSC) Other Comprehensive 44,780 Income (G/L) Cash 194,000 Pension Asset/Liability 371,000

Points Received: Comments:

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6.

Question :

(TCO C) Kasper, Inc. sponsors a defined-benefit pension plan. The

following data relates to the operation of the plan for the year 2013. Service cost $350,000 Contributions to the plan $225,000 Actual return on plan assets $185,000 Projected benefit obligation (beginning of year) $3,400,000 Fair value of plan assets (beginning of year) $3,300,000 The expected return on plan assets and the settlement rate were both 9%. The amount of pension expense reported for 2013 is
Student Answer:

$471,000.00. $359,000.00. $350,000.00. $656,000.00.


Instructor Explanation:

See Chapter 20. 350000 + (3400000 * 0.09) - (3400000 * 0.09)

Points Received: Comments:

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