One component of pension expense is actual return on plan assets. Plan assets in

Question

One component of pension expense is actual return on plan assets. Plan assets include A) assets that a company holds to earn a'reasonable return, generally at minimum risk B) plan assets still under the control of the company C) only assets reported on the balance sheet of the employer as prepaid pension cost. D) None of these answers are correct. 5, 6. A corporation has a defined-benefit plan. A pension liability will result at the end of the year if the A) B) C) D) 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. 7. The actruatial sains l t re tom changes in the projected benefi odliation ar calle Asset Liability A) B) C) D) Yes No Yes No Yes No No Yes 8. The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets. Expected Return Coridor on Plan Assets Yes A) B) Yes C) No D)No Yes No Yes No 9. Presented below is pension information related to Woods, Inc. for the year 2018: $410,000 270,000 120,000 Service cost Interest on projected benefit obligation Interest on vested benefits Amortization of prior service cost due to increase in benefits Expected return on plan assets The amount of pension expense to be reported for 2018 is A) $590,000. B) $770,000. C) $860,000. D) $650,000. 60,000 90,000

Explanation / Answer

5. A

6. A

7. D

8. A

9. D (Pension Expenses= Service Cost + Interest on Projected Benefit Obligation + Amortisation Prior service cost due to increase in benefits - Expected Return on plan Assets)

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