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.;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.;Question 10.10. Counterbalancing errors;correct themselves over a two year period.;never correct themselves.;always require correcting entries.;none of the above are correct.;Question 11.11. 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#77793 | Written in 18-Jul-2015Price : $21