Vester corporation instituted an irs approved plan to contribute

Vester Corporation instituted an IRS approved plan to contribute 10% of each employee’s salary to a plan that would pay benefits to the employee after termination of services. This plan is a __________ plan.
A. defined benefit pension
B. defined contribution pension
C. government sponsored pension
D. postretirement insurance

Question 2 of 20
Vern Corporation instituted an IRS approved plan to contribute moneys to a plan that would pay each employee 2% of his or her highest year of salary for each year of service upon termination of services. This plan is a __________ plan.
A. defined benefit pension
B. defined contribution pension
C. government sponsored pension
D. postretirement insurance

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Question 3 of 20
Tim Inc. contributes $34,500 to its defined contribution plan. Which one of the following journal entries properly records this transaction?
A.
B.
C.
D.
DR Pension Expense

Question 4 of 20
The assets and liabilities of the pension plan itself are included in the financial statements of the plan:
A. administrator.
B. beneficiary.
C. sponsor.
D. trustee.

Question 5 of 20
QUESTIONS 5 THROUGH 8 ARE BASED ON TABLE 3-1.

Table 3-1
Talley, Inc. Pension Plan Year 7 Year 8
Service cost
15,000
17,000
Interest cost
9,000
10,000
Actual return on plan assets
7,500
10,800
Beginning of year plan assets
100,000
120,000
Settlement rate
8%
8%

What is Talley’s pension expense to be recorded for Year 7? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
A. $15,000
B. $16,000
C. $16,500
D. $24,000

Question 6 of 20
What is Talley’s pension expense to be recorded for Year 8? (Hint: The expected return on plan assets equals beginning of year plan assets times the settlement rate.)
A. $16,200
B. $17,000
C. $17,400
D. $27,000

Question 7 of 20
What is Talley’s deferred gain or loss from the return on plan assets for Year 7?
A. $0
B. $500 deferred gain
C. $500 deferred loss
D. Unknown from information provided

Question 8 of 20
What is Talley’s deferred gain or loss from the return on plan assets for Year 8?
A. $0
B. $1,200 deferred gain
C. $1,200 deferred loss
D. Unknown from information provided

Question 9 of 20
To compute amortization on the cumulative unrecognized gains and losses in a pension plan, the corridor is computed as 10% of the:
A. average of the beginning balances of the plan assets and the projected benefit obligation.
B. greater of the beginning balances of the plan assets or the projected benefit obligation.
C. greater of the beginning market-related value of the plan assets or the projected benefit obligation.
D. lesser of the beginning market-related value of the plan assets or the projected benefit obligation.

Question 10 of 20
The current year amortization amount of accumulated unrecognized losses in a pension plan will:
A. decrease the pension expense.
B. have no effect on pension expense.
C. increase the pension expense.
D. never be accounted for and reported.

Question 11 of 20
If the projected benefit obligation (PBO) for a pension plan exceeds the fair value of the plan assets at the time of adoption of SFAS No. 87, which one of the following is created?
A. Cumulative asset gain or loss
B. Cumulative obligation gain or loss
C. Transition asset
D. Transition liability

Question 12 of 20
If a pension plan amendment results in a $1,500,000 increase in the projected benefit obligation, the pension expense will:
A. be decreased by $1,500,000 over the remaining service period of the future beneficiaries.
B. be increased by $1,500,000 in the year of the amendment.
C. be increased by $1,500,000 over the remaining service period of the future beneficiaries.
D. not be affected.

 

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