acct 253 ch 20

In a defined contribution plan, a formula is used that
A. defines the benefits that the employee will receive at the time of retirement
B. requires an employer to contribute a certain sum each period based on the formula
C. ensures that pension expense and the cash funding amount will be different
D. ensures that employers are at risk to make sure funds are available at retirement

Which of the following is not a characteristic of a defined contribution pension plan?
A. the benefit of gain or the risk of loss from the assets contributed to the pension fund are borne by the employee
B. the benefits to be received by employees are defined by the terms of the plan
C. the accounting for a defined contribution plan is straightforward and uncomplicated
D. the employer's contribution each period is based on a formula

In a defined-benefit plan, a formula is used that
A. defines the benefits that the employee will receive at the time of retirement
B. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees
C. requires that pension expense and the cash funding amount be the same
D. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee

In a defined benefit plan, the process of funding refers to
A. determining the projected benefit obligation
B. making the periodic contributions to a funding agency to ensure that funds are available to meet retirees' claims
C. determining the amount that might be reported for pension expense
D. determining the accumulated benefit obligation

In accounting for a defined benefit pension plan
A. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan
B. the expense recognized each period is equal to the cash contribution
C. an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the beneftis promised
D. the liability is determined based upon known variables that reflect future salary levels promised to employees

The relationship between the amount funded and the amount reported for pension expense is as follows:
A. pension expense must equal the amount funded
B. pension expense will be more than the amount funded
C. pension expense may be greater than, equal to, or less than the amount funded
D. pension expense will be less than the amount funded

Vested benefits
A. are defined by all of these
B. are not contringent upon additional service under the plan
C. usually require a certain minimum number of years of service
D. are those that the employee is entitled to receive even if fired

In computing the service cost component of pension expense, the FASB concluded that
A. the projected benefit obligation using future compensation levels provides a relistic measure of present pension obligation and expense
B. the accumulated benefit obligation provides a more realistic measure of the pension obligation on a going concern basis
C. a company should employ an actuarial funding method to report pension expense that best reflects the cost of beneftis to employees
D. all of these

In determining the present value of the prospective benefits (often referred to as the projected benefit obligation), the following are considered by the actuary:
A. all of these factors
B. benefit provisions of the plan
C. retirement and mortality rate
D. interest rates

The unexpected gains or losses that result from changes in the projected benefit obligation are called
asset gains & losses/liability gains & losses
A. no/yes
B. yes/yes
C. yes/no
D. no/no

The actual retrun on plan assets
A. is equal to the change in the fair value of the plan assets during the year
B. includes interest, dividends, and changes in the market value of the fund assets
C. all of these
D. is equal to the actual rate of return times the fair value of the plan assets at the beginning of the period

In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as
A. accrued or prepaid pension cost
B. an accrued actuarial liability
C. a charge or credit to unrealized appreciation and depreciation
D. an offset to the liability for prior service cost

When a company adopts a pension plan, prior sevice costs should be charged to
A. operations of prior periods
B. retained earnings
C. operations of the current period
D. operations of current and future periods

Prior service cost is amortized on a
A. straight-line basis over the expected future years of service
B. straight line basis over 15 years
C. years of service method or on a striaght-line basis over the average remaining service life of active employees
D. straight line basis over the average remaining life of active employees or 15 years, whichever is longer

Unrecognized gains and losses that relate to the computation of pension expense should be
A. recorded currently and in the future by applying the corridor method which provides the amount to be amortized
B. recorded only if a loss is determined
C. amortized over a 15 year period
D. recorded currently as an adjustment to pension expense in the period incurred

Market related asset value is used to determine the corridor and to calulate the expected return on plan assets
expected corridor/retrun on plan assets
A. yes/no
B. yes/yes
C. no/yes
D. no/no

A pension fund gain or loss that is caused by a plant closing should be
A. spread over the current year and future years
B. recognized immediately as a gain or loss on the plant closing
C. recognized as a prior period adjustment
D. charged or credited to the current pension expense

Which of the following disclosures of pension plan information would not normally be required by Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits"?
A. the funded status of the plan and the amounts recognized in the financial statements
B. the major components of pension expense
C. the rates used in measuring the benefit amounts
D. the amount paid from the pension fund to retirees during the period

The main purpose of the Pnesion Benefit Guaranty Corporation is to
A. all of these
B. administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities
C. require plan administrators to publish a comprehensive description and summary of their plans
D. require minimum funding of pensions

Which of the following statements is true about postretirement health care benefits
A. the benefit is payable monthly
B. the beneficiary is the retiree, spouse, and other dependents
C. they are generally funded
D. the benfits are well-defined and level in dollar amount

Postretirement benefits may include all of the following except
A. dental care
B. severance pay to laid-off employees
C. legal and tax services
D. tuition assistance

Which of the following statements is correct?
A. the accrual period generally ends on the date the employee is eligible to receive the benefits and ceases to earn additional benefits
B. the accrual period generally begins when an employee is hired
C. all of these
D. the period over which postretirement benefits are accrued is called the attribution period

Which of the following is a significant item not recognized in the accounts and in the financial statements?
A. postretirement benefit plan assets
B. accumulated postretirement benefit obligation
C. all of these
D. expected postretirement benefit obligation

The employer's pension expnese is the amount that it is obligated to pay to the pension trust in
A. a defined benefit plan
B. a defined contribution plan
C. both defined benefit and defined contribution plan
D. none of these

In a defined benefit plan, the funding level depends on all of the following factors except
A. turnover
B. age of the employer company
C. interest earnings
D. compension levels

A measure of an employer's pension obligation using future salary levels is the
A. defined benefit obligation
B. accumulated benefit obligation
C. projected benefit obligation
D. vested benefit obligation

Which one of the following is not a component of pension expense
A. amortization of projected benefit obligation
B. amortization of prior service cost
C. gain or loss
D. actual return on plan assets

All of the following increase pension expenses except
A. service cost
B. amortization of prior service cost
C. actual return on plan assets
D. interest on the liability

Which one of the following pension items is recognized in the employer's accounts and financial statements?
A. projected benefit obligation
B. unrecognized prior service costs
C. pension plan assets
D. none of these

The FASB prefers that unrecognized prior service cost be amortized using the
A. years of service method
B. straight line method
C. double decline balance method
D. sum of the year digits method

The unrecognized net gain or loss balance must be amortized when it exceeds 10% of the larger of the
A. beginning accumulated benefit obligation or the market related asset value
B. beginning projected benefit obligation or the market related asset value
C. ending projected benefit obligation or the market related asset value
D. ending accumulated benefit obligation or the market related asset value

Which of the following losses should be recognized immediately?
A. asset losses
B. asset losses and liability losses
C. losses that arise from a single occurrence such as a plant closing
D. liability losses

All of the following information should be disclosed in the notes to the financial statements except
A. the major components of pension expense
B. the funded status of the plan and the amounts recognized in the financial statements
C. a reconciliation showing how the projected benefit obligation and the fair value of the plan assets changed during the period
D. all of the options are disclosed