In determining the present value of the prospective benefits (often referred to as the defined benefit obligation), the following are considered by the actuary: retirement and mortality rate. interest rates. benefit provisions of the plan. all of these factors. In accounting for a defined-benefit pension plan an appropriate funding pattern must be established to ensure that enough monies will be available at retirement to meet the benefits promised. the employer's responsibility is simply to make a contribution each year based on the formula established in the plan. the expense recognized each period is equal to the cash contribution. the liability is determined based upon known variables that reflect future salary levels promised to employees. Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation? Vested benefit obligation Accumulated benefit obligation Defined benefit obligation Restructured benefit obligation 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 an offset to the liability for past service cost. pension asset/liability. as other comprehensive income (G/L) as accumulated other comprehensive income. A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the defined benefit obligation exceeds the fair value of the plan assets. fair value of the plan assets exceeds the defined benefit obligation. amount of employer contributions exceeds the pension expense. amount of pension expense exceeds the amount of employer contributions.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 3C

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

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

Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation?
Vested benefit obligation
Accumulated benefit obligation
Defined benefit obligation
Restructured benefit obligation

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
an offset to the liability for past service cost.
pension asset/liability.
as other comprehensive income (G/L)
as accumulated other comprehensive income.

A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the
defined benefit obligation exceeds the fair value of the plan assets.
fair value of the plan assets exceeds the defined benefit obligation.
amount of employer contributions exceeds the pension expense.
amount of pension expense exceeds the amount of employer contributions.

For Becker Corporation, year-end plan assets were $2,000,000. At the beginning of the year, plan assets were $1,680,000. During the year, contributions to the pension fund were $120,000, and benefits paid were $200,000. Compute Becker’s actual return on plan assets.

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