FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 17: Pensions and Other Postretirement Benefits

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Essay

Review LaterAdd Note

Review Later

In its 2018 annual report to shareholders, Livey Companies Inc. (LCI) disclosed the following information regarding its postemployment benefit plans: The Company and certain of its affiliates sponsor postemployment benefit plans covering substantially all salaried and certain hourly employees. The cost of these plans is charged to expense over the working life of the covered employees. Net postemployment costs consisted of the following for the years ended December 31, 2018, 2017, and 2016: $\begin{array} { | l | r | r | r | } \hline \text { \$ in millions) } & & & \\\hline & \mathbf { 2 0 1 8 } & \mathbf { 2 0 1 7 } & \mathbf { 2 0 1 6 } \\\hline \text { Service cost } & \$ 34 & \$ 26 & \$ 24 \\\hline \text { Amortization of net loss } & 8 & 6 & 2 \\\hline \text { Other expense } & - & - & \underline { 161 } \\\hline \text { Net postemployment costs } & \$ 42 & \$ 32 & \$ 187 \\\hline\end{array}$ The company instituted workforce reduction programs in its North American food operations in 2016. These actions resulted in incremental postemployment costs, which are shown as other expense above. Required: Describe the three components in the net postemployment costs disclosed by LCI.

Correct Answer

verified

The service cost each year is an allocat...

View Answer

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Plan assets

A) Future compensation levels estimated.
B) Not contingent on continued employment.
C) Gain from revised expectation of return plan assets.
D) Increased by employer contributions.
E) Excess over 10% of the larger of plan assets or PBO.

F) C) and D)
G) A) and D)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Listed below are six terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Choice between PBO and ABO

The components of postretirement benefit expense are similar to the components of pension expense. How does the service cost component differ between the two expenses?

The following incomplete (columns have missing amounts) pension spreadsheet is for Old Tucson Corporation (OTC) . - What is OTC's pension expense for the year?

A company's postretirement health care benefit plan had an APBO of $265,000 on January 1, 2018. During 2018, retiree benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service cost for 2018 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of the APBO at December 31, 2018, was:

Vrable Corporation has a defined benefit pension plan. Two alternative possibilities for pension-related data for the current calendar year are shown below: $\begin{array} { | l | r | r | } \hline & \text { Case 1 } & \text { Case 2 } \\\hline \text { Net loss (gain), Jan. 1 } & \$ 240,000 & ( \$ 230,000 ) \\\hline \text { Loss (gain) on plan assets } & ( 8,000 ) & ( 6,000 ) \\\hline \text { Loss (gain) on PBO } & ( 17,000 ) & 12,000 \\\hline \text { ABO, Jan. 1 } & ( 1,900,000 ) & ( 1,500,000 ) \\\hline \text { PBO, Jan. 1 } & ( 2,500,000 ) & ( 1,700,000 ) \\\hline \text { Plan assets, Jan. 1 } & 2,100,000 & 2,000,000 \\\hline \begin{array} { l } \text { Average remaining service } \\\text { period of active employees }\end{array} & & \\\text { (years) } & 10 & 12 \\\hline\end{array}$ Required: For each independent case, calculate amortization of the net loss or gain that should be included as a component of pension expense for the current year.

Pension benefits and postretirement health benefits typically are similar in their:

Payment of retirement benefits:

Amortizing prior service cost for pension plans will:

The following refers to the pension spreadsheet (columns have missing amounts) for the current year for Pancho Villa Enterprises (PVE) . - What was PVE's pension expense for the year?

Consider the following: I. Present value of vested benefits at present pay levels. II. Present value of nonvested benefits at present pay levels. III. Present value of additional benefits related to projected pay increases. - Which of the above constitutes the vested benefit obligation?

Pension data for Goldman Company included the following for the current calendar year: $\begin{array} { | l | r | } \hline \text { Service cost } & \$ 100,000 \\\hline \text { PBO, January } 1 & 750,000 \\\hline \text { Plan assets, January 1 } & 800,000 \\\hline \text { Amortization of prior service cost } & 6,000 \\\hline \text { Amortization of net loss } & 2,000 \\\hline \text { Discount rate, } 8 \% & \\\hline \text { Expected return on plan assets, } 10 \% & \\\hline \text { Actual return on plan assets, } 12 \% & \\\hline\end{array}$ Required: Determine pension expense for the year.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the most correct term. -Service cost

Recording the expense for postretirement benefits will not:

Data pertaining to the postretirement health care benefit plan of Danielson Delivery Service include the following for the current calendar year: Required: 1) Determine Danielson's postretirement benefit expense for the current year. 2) Prepare the journal entries to record the benefit expense and funding for the current year.

Which of the following is true?

A 401k plan:

A statement of comprehensive income does not include:

Wainright Co. began the year with a net pension liability of $112 million (underfunded pension plan). Pension expense for the year included the following ($ in millions): service cost, $40; interest cost, $24; expected return on assets, $16; amortization of net loss, $8; amortization of prior service cost, $12. Required: Prepare the appropriate general journal entry to record Wainright's pension expense.