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Date Taken:
Time Spent:
Points Received:

Question Type:
Multiple Choice
Essay

1/24/2014
54 min , 50 secs
40 / 40 (100%)

# Of Questions:
5
1

# Correct:
5
N/A

Grade Details - All Questions

Question 1.Question :

(TCO C) Presented below is pension information related to Woods, Inc.

for the year 2013.
Service cost
Interest on projected benefit obligation
Interest on vested benefits
Amortization of prior service cost due to increase in
benefits
$14,000
Expected return on plan assets

$84,000
$46,000
$30,000

$21,000

The amount of pension expense to be reported for 2013 is

Student Answer:

$109,000.
$153,000.
$174,000.
$123,000.

See Chapter 20. 84000 + 46000 + 14000 - 21000

Instructor
Explanation:
Points Received:
5 of 5

Comments:
Question 2.Question :
Student Answer:

(TCO C) A pension asset is reported when

the fair value of the pension plan assets is less than the accumulated
benefit obligation.
the fair value of the pension plan assets is less than the accumulated
benefit obligation and a prior service cost exists.
the accumulated benefit obligation is less than the fair value of the
pension plan assets.

Instructor
Explanation:
Points Received:

the projected benefit obligation is less than the fair value of the
pension plan assets.
See Chapter 20.

5 of 5

Comments:
Question 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.

Instructor
Explanation:
Points Received:

legal and tax services.

See Chapter 20.

5 of 5

Comments:
Question 4.Question :

(TCO C) Kathy's Kittens, Inc. has provided the following information for
their post-retirement benefits plan for 2013.
Service cost
$475,000
Discount rate
8%
APBO, January 1, 2013
$3,800,000
EPBO, January 1, 2013
$4,100,000
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:

$931,000.
$969,000.
$779,000.
$803,000.

See Chapter 20. 475000 + (3800000 * 0.08)

Instructor
Explanation:
Points Received:
5 of 5

Comments:
Question 5.Question :

(TCO C) On January 1, 2013, Laura's Living Company has the following defined
benefit pension plan balances.
Projected
benefit
$6,400,000
obligation
Fair value
of plan
6,900,000
assets
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 $335,000 are
created. Other data related to the pension plan are as follows.
2013
2014
Service costs $180,000 $190,000
Prior service
costs
$0
$86,000
amortization
Contributions
(funding) to $200,000 $206,000
the plan
Benefits paid $185,000 $215,000
Actual return
on plan
$621,000 $654,000
assets
Expected rate
of return on 9%
10%
assets
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:

LAURA'S LIVING COMPANY Pension Worksheet - 2013 AND 2014 General

Journal Entries Memo Record Items Annual Cash OCI-Prior OCI-G/L Pension PBO
Plan Assets Pension Service Cost Asset/Libility Expense ----------------------------------------------------------------------------------------------------------------- Bal,1/1/2013
500,000 (6,400,000) 6,900,000 Service Cost 180,000 (180,000) Interest Cost
640,000 (640,000) Actual Return(621,000) 621,000 Contributions (200,000)
200,000 Benefits 185,000 (185,000) ----------------------------------------------------------------------------------------------------------------- Journal Entry, 12/31/13 199,000
(200,000) 0 0 1,000 Balance 12/31/13 501,000 (7,035,000) 7,536,000 Add'l PSC
335,000 (335,000) Bal,1/1/2014 (7,370,000) Service Cost 190,000 (190,000)
Interest Cost 737,000 (737,000) Actual Return(654,000) 654,000 Unexpected
loss(99,600) 99,600 Amz of PSC 86,000 (86,000) Contributions (206,000) 206,000
Benefits 215,000 (215,000) Journal Entry 12/31/14 259,400 (206,000) 249,000
99,600 (402,000) Balance, 12/31/2014 249,000 99,600 99,000 (8,082,000)
8,181,000 Interest cost 2013 = $6,400,000*10% = $640,000 Interest cost 2014 =
$7,370,000*10% = $737,000 Unexpected loss 2014 = ($7,536,000*10%) - $654,000
= $99,600 b.) Journal Entry for 2014 Pension
Expense....................................259,400 Other Comprehensive Income
(PSC).......249,000 Other Comprehensive Income (G/L)........ 99,600
Cash...................................................................206,000 Pension
Asset/Liability...........................................402,000

Instructo See Chapter 20.

r
Explanati (a) Prepare a pension worksheet for the pension plan for 2013 and 2014.
LAURA'S LIVING COMPANY
on:
Pension Worksheet2013 and 2014

Items

Annual
Pension
Expense

General Journal Entries

OCI Prior
OCI Cash
Service Gain/Loss
Cost

Memo Record
Pension
Asset/
Liability

Projected
Benefit
Obligation

Plan
Assets

Balance, Jan. 1, 2013

500,000 (6,400,000) 6,900,000
- Service cost
180,000
(180,000)
- Interest cost
640,000
(640,000)
- Actual return
(621,000)
621,000
- Contributions
(200,000)
200,000
- Benefits
185,000 (185,000)
Journal entry,
199,000 (200,000)
0
0
1,000
12/31/13
Accum OCI, 12/31/12
Balance, Dec. 31,
501,000 (7,035,000) 7,536,000
2013
- Additional PSC
335,000
(335,000)
January 1, 2014
(7,370,000)
- Service cost
190,000
(190,000)
- Interest cost
737,000
(737,000)
- Actual return
(654,000)
654,000
- Unexpected loss
(99,600)
99,600
- Amortization of PSC
86,000
(86,000)
- Contributions
(206,000)
206,000
- Benefits
215,000 (215,000)
Journal entry,
259,400 (206,000) 249,000
99,600 (402,000)
12/31/14
Accum OCI, 12/31/13
0
0
Balance, Dec. 31,
249,000
99,600
99,000 (8,082,000) 8,181,000
2014
2013 Interest cost = $6,400,000 10% settlement rate = $640,000.
2014 Interest cost = $7,370,000 10% settlement rate = $737,000.
2014 Unexpected loss = ($7,536,000 10% expected return on assets in 2012) - $654,000 actual return
on plan assets in 2014 = $99,600.

(b) For 2014, prepare the journal entry to record pension-related amounts.
Pension Expense
259,400
Other Comprehensive Income
249,000
(PSC)
Other Comprehensive Income
99,600
(G/L)
Cash
206,000
Pension Asset/Liability
402,000

Points Received:

15 of 15

Comments:
Question 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.

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

Instructor
Explanation:
Points Received:
5 of 5

Comments: