WEEK FIVE PRACTICE QUIZ

True

False

ending accumulated benefit obligation or the market-related asset value.

beginning accumulated benefit obligation or the market-related asset value.

beginning projected benefit obligation or the market-related asset value.

ending projected benefit obligation or the market related asset value

the pension obligation on the basis of the plan formula applied to all years of employee service, both vested and nonvested, to date and based on current salary levels.

the pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.

an estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.

the shortest possible period for funding to maximize the tax deduction.

The following information is related to the pension plan of Gamekeeper, Inc. for 2017:

Actual return on plan assets

$335,000

Amortization of net gain

132,000

Amortization of prior service cost due to increase in benefits

240,000

Expected return on plan assets

368,000

Interest on projected benefit obligation

580,000

Service cost

1,295,000

Pension expense for 2017 is

$1,894,000.

$1,927,000.

$1,615,000.

$1,165,000.

6. Practice Question 29

The ending balance in the Pension Asset/Liability column should equal the

balance of the Projected Benefit Obligation.

net balance in the memo record at year end.

balance of the Accumulated Pension Obligation.

balance of the Plan Assets.

7. Practice Question 33

The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets.

Corridor

Expected Return on Plan Assets

1.

Yes

Yes

2.

Yes

No

3.

No

Yes

4.

No

No

1

2

3

4

8. Practice Question 35
The unexpected gains or losses that result from changes in the projected benefit obligation are called

Asset Gains and Losses

Liability Gains and Losses

1)

Yes

Yes

2)

No

No

3)

Yes

No

4)

No

Yes

3

4

2

1

9. Practice Question 39
All of the following statements regarding the accounting for various forms of compensation plans under IFRS are true except:

Under IFRS, the net defined benefit liability (asset) is the deficit or surplus related to the defined benefit pension plan.

Remeasurements, under IFRS, are gains and losses related to the defined benefit obligation and gains and losses on the fair value of the plan assets.

IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans.

IFRS does not recognize prior service costs on the balance sheet, but instead expenses them in the current period.

10. Practice Question 15
When preparing the journal entry with a plan amendment, if the pension liability exceeds the unrecognized prior service cost:

the Additional Pension Liability account is credited for the amount of the unrecognized prior service cost.

the excess is debited to Other Comprehensive Income (PSC).

no entry is necessary to record the liability.

the Additional Pension Liability account is decreased.