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Pensions

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Barbara W. Scofield, PhD, CPA - Associate Professor of Accounting
and Director of the Financial Accounting Concentration
University of Dallas
Irving, Texas



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1 - Pension Expense is increased by:
Expected Return on Plan Assets
Service Cost
Amortization of an Unrecognized Gain
Employee Contributions to Pension Fund

2 - Pension Obligation (Projected Benefit Obligation) is increased by:
Pension Trust Fund investment losses
Payments to Retirees
Employer Contributions to Pension Fund
Actuarial Change due to increased survival rates of retirees

3 - Pension Plan Assets are increased by:
Payments to Retirees
Service Cost
Employer Contributions to Pension Fund
Amortization of Prior Service Cost

4 - When a company increases its settlement rate assumption:
Projected Benefit Obligation declines in value
Projected Benefit Obligation increases in value
Pension Plan Assets decline in value
Pension Plan Assets increase in value.

5 - When a company increases its expected return on plan assets assumption:
Pension Plan Assets decline in value
Pension Plan Assets increase in value.
Pension Expense declines in value
Pension Expense increases in value.

6 - ABC  Company has initiated a defined benefit pension plan on 1/1/ 2008 and funded it at $100,000 immediately.  The plan assets earned 15% during the year, although the expected long-term rate of returns on plan assets is 11%.  Service cost is $10,000.  The settlement rate is 8%.  There is no Prior Service Cost and no retirement benefit were paid in 2008. What is the value of Pension Expense for 2008?
$1000 CREDIT
$1000 DEBIT
$5000 CREDIT
$5000 DEBIT

7 - ABC  Company has initiated a defined benefit pension plan on 1/1/ 2008 and funded it at $100,000 immediately.  The plan assets earned 15% during the year, although the expected long-term rate of returns on plan assets is 11%.  Service cost is $10,000.  The settlement rate is 8%.  There is no Prior Service Cost and no retirement benefits were paid in 2008. What is the value of Accumulated Other Comprehensive Income associated with the pension plan for 2008?
$5000 CREDIT
$5000 DEBIT
$4,000 CREDIT
$4,000 DEBIT

8 - ABC  Company has initiated a defined benefit pension plan on 1/1/ 2008 and funded it at $100,000 immediately.  The plan assets earned 15% during the year, although the expected long-term rate of returns on plan assets is 11%.  Service cost is $10,000.  The settlement rate is 8%.  There is no Prior Service Cost and no retirement benefits were paid in 2008. What is the value of Pension Plan Assets at the end of the year?
$115,000
$111,000
$101,000
$10,000

9 - ABC  Company has initiated a defined benefit pension plan on 1/1/ 2008 and funded it at $100,000 immediately.  The plan assets earned 15% during the year, although the expected long-term rate of returns on plan assets is 11%.  Service cost is $10,000.  The settlement rate is 8%.  There is no Prior Service Cost and no retirement benefits were paid in 2008. What is the value of Projected Benefit Obligation at the end of the year?
$115,000
$100,000
$18,000
$10,000

10 - ABC  Company has initiated a defined benefit pension plan on 1/1/ 2008 and funded it at $100,000 immediately.  The plan assets earned 15% during the year, although the expected long-term rate of returns on plan assets is 11%.  Service cost is $10,000.  The settlement rate is 8%.  There is no Prior Service Cost and no retirement benefits were paid in 2008. What is the value of net Pension Obligation / net Pension Asset on the balance sheet at the end of the year?
$125,000 ASSET
$115,000 ASSET
$105,000 ASSET
$10,000 LIABILITY

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