Pension information related to Waters Company as of December 31, 2015: Accumulated benefit obligation $3,000,000
1. Presented below is pension information related to Waters Company as of December 31, 2015;Accumulated benefit obligation $3,000,000;Projected benefit obligation 3,500,000;Plan assets (at fair value) 3,700,000;Accumulated OCI (G / L) 100,000;The amount to be reported as Pension Asset / Liability as of December 31, 2015 is;Pension Liability of $500,000.;Pension Asset of $700,000.;Pension Liability of $200,000.;Pension Asset of $200,000.;Question 2.2. Which of the following disclosures of pension plan information would not normally be required?;The amount of prior service cost changed or credited in previous years.;The major components of pension expense.;A reconciliation showing how the projected benefit obligation and the fair value of the plan assets changed from the beginning to the end of the period.;The rates used in measuring the benefit amounts.;Question 3.3. A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the;projected benefit obligation exceeds the fair value of the plan assets.;fair value of the plan assets exceeds the projected benefit obligation.;amount of employer contributions exceeds the pension expense.;amount of pension expense exceeds the amount of employer contributions.;Question 4.4. The following information relates to the pension plan for the employees of Turner Co.;1/1/14 12/31/14 12/31/15;Accum. benefit obligation $6,160,000 $6,440,000 $8,400,000;Projected benefit obligation 6,510,000 6,972,000 9,338,000;Fair value of plan assets 5,950,000 7,280,000 8,036,000;AOCI ? net (gain) or loss -0- (1,008,000) (1,120,000);Settlement rate (for year) 11% 11%;Expected rate of return (for year) 8% 7%;Turner estimates that the average remaining service life is 16 years. Turner's contribution was $882,000 in 2015 and benefits paid were $658,000.;For purposes of determining the amount of AOCI (net gain) amortized in 2015, the corridor for 2015 is;$722,400;$728,000;$791,000;$933,800;Question 5.5. Presented below is information related to Decker Manufacturing Company as of December 31, 2015;Projected benefit obligation $800,000;Accumulated OCI -net gain 300,000;Accumulated OCI (PSC) 405,000;The amount for the prior service cost is related to an increase in benefits. The fair value of the pension plan assets is $600,000.;The pension liability reported on the balance sheet at December 31, 2015 is;$200,000;$600,000;$800,000;1,$205,000;Question 6.6. An example of a correction of an error in previously issued financial statements is a change;from the FIFO method of inventory valuation to the LIFO method.;in the service life of plant assets, based on changes in the economic environment.;from the cash basis of accounting to the accrual basis of accounting.;from the double-declining balance method of depreciation to the straight-line method.;Question 7.7. Robinson Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?;A change in accounting estimate.;A change in reporting entity.;A change due to error.;A change in accounting principle.;Question 8.8. When a company decides to switch from the double-declining balance method to the straight-line method, this change should be handled as a;change in accounting principle.;change in accounting estimate.;prior period adjustment.;correction of an error.;Question 9.9. The following facts relate to the Patton Co. postretirement benefits plan for 2015;Service cost $180,000;Interest Expense 135,000;APBO, January 1, 2015 $1,500,000;Benefit payments to employees $115,000;The amount of postretirement expense for 2015 is;$180,000.;$315,000.;$360,000.;$430,000.;10. Counterbalancing errors;correct themselves over a two year period.;never correct themselves.;always require correcting entries.;none of the above are correct.;11. On January 1, 2012, Lake Co. purchased a machine for $1,056,000 and depreciated it by the straight-line method using an estimated useful life of eight years with no salvage value. On January 1, 2015, Lake determined that the machine had a useful life of six years from the date of acquisition and will have a salvage value of $96,000. An accounting change was made in 2015 to reflect these additional data. The accumulated depreciation for this machine should have a balance at December 31, 2015 of;$584,000;$616,000.;$640,000.;$704,000.;Question 12.12. On January 1, 2012, Penn Corporation acquired machinery at a cost of $750,000. Penn adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2015, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2015 would be;$38,400.;$54,857.;$75,000.;$107,142.;Question 13.13. A pension asset is reported when;the accumulated benefit obligation exceeds the fair value of pension plan assets.;the accumulated benefit obligation exceeds the fair value of pension plan assets, but a prior service cost exists.;pension plan assets at fair value exceed the accumulated benefit obligation.;pension plan assets at fair value exceed the projected benefit obligation.;Question 14.14. On July 1, 2015 Taylor Corporation hired you as their new bookkeeper. In your first few days on the job, you noticed a few irregularities. One of these was the failure of the previous bookkeeper to record year-end wages payable of $15,000 on December 31, 2014. The wages were paid in January, 2015. The 2014 financial statements were issued in February, 2015. You determine the necessary correcting entry is;Salaries and Wages Expense 15,000;Salaries and Wages Payable 15,000;Salaries and Wages Expense 15,000;Cash 15,000;Salaries and Wages Payable 15,000;Cash 15,000;Retained Earnings 15,000;Salaries and Wages Expense 15,000;Question 15.15. The relationship between the amount funded and the amount reported for pension expense is as follows;pension expense must equal the amount funded.;pension expense will be less than the amount funded.;pension expense will be more than the amount funded.;pension expense may be greater than, equal to, or less than the amount funded.;Question 16.16. Postretirement benefits may include all of the following, except;severance pay to laid-off employees.;dental care.;legal and tax services.;tuition assistance.;Question 17.17. Alternative methods exist for the measurement of the pension obligation (liability). Which measure requires the use of future salaries in its computation?;Restructured benefit obligation;Vested benefit obligation;Accumulated benefit obligation;Projected benefit obligation;Question 18.18. Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of;materiality.;consistency.;conservatism.;objectivity.;Question 19.19. In a defined-benefit pension plan;the benefit of gain or the risk of loss from the assets contributed to the pension plan is borne by the employee.;a formula is used that defines the benefits that the employee will receive at the time of retirement.;pension expense and the cash funding amount are the same.;the employer's responsibility ends with the annual contribution, no promise is made concerning the ultimate benefits to be paid out to the employees.;Question 20.20. Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate?;Current period and prospectively;Current period and retrospectively;Retrospectively only;Current period only;Question 21.21. Barton, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2015.;January 1, 2015 December 31, 2015;Fair value of pension plan assets $4,200,000 $4,500,000;Projected benefit obligation 4,800,000 5,160,000;Accumulated benefit obligation 840,000 1,020,000;Accumulated OCI ? (Gains / Losses) -0- (90,000);The service cost component of pension expense for 2015 is $450,000 and the amortization of prior service cost due to an increase in benefits is $60,000. The settlement rate is 10% and the expected rate of return is 9%. What is the amount of pension expense for 2015?;$450,000;$612,000;$621,000;$522,000;Question 22.22. A company changes from percentage-of-completion to completed-contract method, which is used for tax purposes. The entry to record this change should include a;debit to Construction in Process.;debit to Loss on Long-term Contracts in the amount of the difference on prior years, net of tax.;debit to Retained Earnings in the amount of the difference on prior years, net of tax.;credit to Deferred Tax Liability.;Question 23.23. On December 31, 2015 Dean Company changed its method of accounting for inventory from the weighted average cost method to the FIFO method. This change caused the 2015 beginning inventory to increase by $840,000. The entry to record the cumulative effect of this accounting change, ignoring all tax effects, will also include an;$840,000 debit to COGS.;$840,000 credit to COGS.;$840,000 debit to Retained Earnings.;$840,000 credit to Retained Earnings.;Question 24.24. Which of the following is not a characteristic of a defined-contribution pension plan?;The employer's contribution each period is based on a formula.;The benefits to be received by employees are determined by an employee?s highest compensation level defined by the terms of the plan.;The accounting for a defined-contribution plan is straightforward and uncomplicated.;The benefit of gain or the risk of loss from the assets contributed to the pension fund is borne by the employee.;Question 25.25. Presented below is pension information related to Woods, Inc. for the year 2015;Service cost $82,000;Interest on projected benefit obligation 54,000;Interest on vested benefits 24,000;Amortization of prior service cost due to increase in benefits 12,000;Expected return on plan assets 18,000;The amount of pension expense to be reported for 2015 is;$118,000.;$154,000.;$172,000.;$130,000.
Paper#18935 | Written in 18-Jul-2015Price : $47