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.
A) A shareholders’ equity account.
B) Reduced by return on assets.
C) Reported as a net pension liability.
D) A financing decision.
E) All funding is provided by the employer.
152) Noncontributory pension plan
153) Contribution to pension fund
154) Pension expense
155) Prior service cost
156) The PBO exceeds plan assets
83
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.
A) Caused by plan amendment.
B) Causes a loss-other comprehensive income.
C) Causes a gain-other comprehensive income.
D) Caused by changes in assumptions used to measure the PBO.
E) Pension plan assets exceed the PBO.
157) Gain on plan assets
158) Return on plan assets less than the expectation
159) Prior service cost
160) Overfunded pension plan
161) Return on plan assets exceeds the expectation
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.
A) Created only by the passage of time.
B) Created by “ERISA” legislation.
C) Difference between PBO and plan assets.
D) Current pay levels implicitly assumed.
E) Future salary levels estimated to be higher than previously expected.
162) Loss-other comprehensive income
163) Accumulated benefit obligation
164) Pension Benefit Guaranty Corp.
165) Funded status
166) Interest cost
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.
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.
167) Amortize net loss—AOCI
168) Delayed recognition in earnings
169) Projected benefit obligation
170) Vested benefit obligation
171) Plan assets
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.
A) Included in the calculation of pension expense.
B) Retirement benefits specified by formula.
C) Reduce(s) both the PBO and plan assets.
D) Protection for employee pension rights.
E) Reported as a shareholders’ equity account.
172) Accumulated other comprehensive income
173) Service cost
174) Defined benefit plan
175) Vesting requirements
176) Retiree benefits paid
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.
A) Risk borne by employee.
B) Return on plan assets lower or (higher) than expected.
C) Increase in the PBO.
D) Used by actuaries to adjust for the time value of money.
E) Actuarial estimate of other postretirement benefits to be received by participants.
F) Trade-off between relevance and reliability.
177) EPBO
178) Loss or (gain) on plan assets
179) Defined contribution plan
180) Discount rate
181) Choice between PBO and ABO
182) Service cost
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.
A) The portion of the EPBO attributed to employee service to date.
B) Portion of the EPBO attributed to the current period.
C) Process of assigning the cost of benefits to the years during which those benefits are assumed
to be earned by employees.
D) Related to need, not service.
E) Discounted present value of total postretirement benefit costs.
F) Discount rate times beginning APBO.
183) Attribution
184) EPBO
185) Postretirement health care
186) APBO (postretirement)
187) Service cost
188) Interest cost
189) On January 1 of the current reporting year, Coda Company’s projected benefit obligation
was $30 million. During the year, pension benefits paid by the trustee were $4 million. Service
cost was $10 million. Pension plan assets earned $5 million as expected. At the end of the year,
there was no net gain or loss and no prior service cost. The actuary’s discount rate was 10%.
Required:
Determine the amount of the projected benefit obligation at December 31.
190) Pension data for Matta Corporation include the following for the current calendar year:
($ in
millions)
Discount rate, 10%
PBO, January 1
$360
PBO, December 31
450
ABO, January 1
200
ABO, December 31
275
Cash contributions to pension fund,
December 31
100
Benefit payments to retirees, December 31
54
Required:
Assuming no change in actuarial assumptions and estimates, determine the service cost
component of pension expense for the current year.
Beginning PBO, January 1
Service cost
Interest cost (10% × $360)
Loss (gain) on PBO
Retiree benefits paid
Ending PBO, December 31
191) The following information relates to Hatami Company’s defined benefit pension plan
during the current reporting year:
$600,000,000
50,000,000
40,000,000
90,000,000
0
32,000,000
60,000,000
Required:
Determine the balance of pension plan assets at fair value on December 31.
Plan assets beginning of the year
Actual return
Cash contributions
Retiree benefits
Plan assets end of the year
192) The following information relates to Schmidt Sausage Co.’s defined benefit pension plan
during the current reporting year:
($ in millions)
Plan assets beginning of the year
$400
Expected return on plan assets
40
Actual return on plan assets
32
Cash contributions
60
Amortization of net loss
8
Retiree benefits
9
Required:
Determine the amount of pension plan assets at fair value on December 31.
year
Actual return
Cash contributions
Retiree benefits
Plan assets end of the year
193) Pension data for Sewell Corporation include the following for the current calendar year:
Discount rate, 8%
Expected return on plan assets, 10%
Actual return on plan assets, 12%
PBO, January 1
$620,000,000
Plan assets, January 1
630,000,000
Plan assets, December 31
670,000,000
Benefit payments to retirees, December
31
55,000,000
Required:
Assuming cash contributions were made at the end of the year, what was the amount of those
contributions?
Plan assets beginning of the year
$630
Actual return (12% × $630)
75.6
Cash contributions
?
Retiree benefits
(55)
Plan assets end of the year
$670
194) Pension data for Goldman Company included the following for the current calendar year:
Service cost
$100,000
PBO, January 1
750,000
Plan assets, January 1
800,000
Amortization of prior service cost
6,000
Amortization of net loss
2,000
Discount rate, 8%
Expected return on plan assets, 10%
Actual return on plan assets, 12%
Required:
Determine pension expense for the year.
Service cost
Interest cost (8% × $750,000)
Expected return ($800,000 × 10%)
Amortization of prior service cost
Amortization of net loss
Pension expense
195) Vrable Corporation has a defined benefit pension plan. Two alternative possibilities for
pension-related data for the current calendar year are shown below:
Case 1
Case 2
Net loss (gain), Jan. 1
$240,000
($230,000)
Loss (gain) on plan assets
(8,000)
(6,000)
Loss (gain) on PBO
(17,000)
12,000
ABO, Jan. 1
(1,900,000)
(1,500,000)
PBO, Jan. 1
(2,500,000)
(1,700,000)
Plan assets, Jan.1
2,100,000
2,000,000
Average remaining service
period of active employees
(years)
10
12
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.
Net loss or gain
Less: 10% corridor*
Excess
Service period
Amortization
$2,500