Identify The Letter of The Choice That Best Completes The Statement or Answers The Question [PDF]

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PRACTICAL ACCOUNTING 1 – REVIEW EMPLOYEE BENEFITS PROF. U.C. VALLADOLID Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. JP Company provided the following information for the current year: Projected benefit obligation, January 1 Fair value of plan assets, January 1 Current service cost Actual return on plan assets Actuarial gain during the year Employer contribution Benefits paid to retirees Settlement rate What is the total defined benefit cost? a. 1,120,000 c. 1,170,000



5,600,000 5,000,000 1,110,000 450,000 150,000 425,000 390,000 10% b. 1,100,000 d. 1,070,000



2. JP Company provided the following information pertaining to the defined benefit plan for the current year: Current service cost Actual return on plan assets Interest income on plan assets Past service cost during the year Annual interest on pension liability



1,600,000 350,000 400,000 50,000 500,000



What is the total defined benefit cost? a. 2,150,000 c. 1,800,000



b. 1,700,000 d. 1,750,000



3. Shawn Company provided the following information for the current year: Current service cost Actual return on plan assets Interest expense on PBO Interest income on plan assets Loss on plan settlement Past service cost during the year Contribution to the plan



520,000 810,000 590,000 350,000 240,000 360,000 1,500,000



Q1. What is the employee benefit expense for the current year? a. 1,710,000 b. 1,470,000 c. 1,350,000 d. 1,360,000 Q2. What is the remeasurement gain or loss? a. 460,000 loss b. 460,000 gain c. 220,000 loss d. 220,000 gain Q3. What is the total defined benefit cost? a. 1,820,000 b. 900,000 c. 740,000 d. 960,000



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Q4. What is the prepaid or accrued benefit cost for the year? a. 600,000 accrued b. 600,000 prepaid c. 140,000 accrued d. 140,000 prepaid 4. On January 1, 2020, Shawn Company reported the fair value of plan assets at P6,700,000 and projected benefit obligation at P7,600,000. The entity revealed the following for the current year: Current service cost Past service cost Discount rate Actual return on plan assets Contribution to the plan Benefits paid to retirees



1,450,000 300,000 10% 500,000 1,500,000 800,000



Q1. What is the employee benefit expense? a. 1,840,000 b. 1,540,000 c. 2,510,000 d. 1,750,000 Q2. What is the remeasurement gain or loss on plan assets? a. 170,000 gain b. 170,000 loss c. 670,000 gain d. 670,000 loss Q3. What is the fair value of plan assets on December 31? a. 8,070,000 b. 7,400,000 c. 7,900,000 d. 8,200,000 Q4. What is the projected benefit obligation on December 31? a. 8,250,000 b. 9,050,000 c. 9,010,000 d. 9,310,000 5. On January 1, 2020, Steven Company reported fair value of plan assets at P6,500,000 and projected benefit obligation at P7,500,000. During the current year, the entity determined that the current service cost was P1,200,000 and the discount rate is 10%. The actual return on plan assets was P800,000 during the year. Other information during the year related to the defined benefit plan is as follows: Contribution to the plan Benefits paid to retires Decrease in projected benefit obligation due to change in actuarial assumptions



1,200,000 1,500,000 200,000



Q1. What is the employee benefit expense? a. 1,300,000 b. 1,950,000 c. 1,200,000 d. 1,100,000 Q2. What is the total remeasurement gain? a. 350,000 b. 150,000 c. 200,000 d. 800,000 Q3. What is the fair value of plan assets on December 31? a. 7,000,000 b. 8,500,000 c. 8,350,000 d. 7,550,000



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Q4. What is the projected benefit obligation on December 31? a. 7,750,000 b. 8,700,000 c. 9,250,000 d. 7,950,000 6. On January 1, 2020, Steven Company reported the fair value of plan assets at P6,000,000 and projected benefit obligation at P8,000,000. During the year, the entity made a lump sum payment to certain plan participants in exchange for their rights to receive specified postemployment benefits. The lump sum payment was P800,000 and the present value of the defined benefit obligation settled was P1,000,000. In addition, the following data are gathered during the current year: Current service cost Actual return on plan assets Contribution to the plan Discount rate



900,000 800,000 700,000 12%



Q1. What is the employee benefit expense? a. 1,140,000 b. 1,860,000 c. 900,000 d. 940,000 Q2. What is the fair value of plan assets on December 31? a. 7,500,000 b. 6,700,000 c. 6,000,000 d. 5,900,000 Q3. What is the projected benefit obligation on December 31? a. 8,900,000 b. 8,860,000 c. 9,680,000 d. 9,060,000 Q4. What is the accrued benefit cost on December 31? a. 2,160,000 b. 2,000,000 c. 3,160,000 d. 2,240,000 7. Ana Company provided the following information on January 1, 2020 prior to the adoption of PAS 19R: Fair value of plan assets Unamortized past service cost Projected benefit obligation Unrecognized actuarial gain The transactions for the current year are as follows: Current service cost Discount rate Actual return on plan assets Contribution to the plan Benefits paid to retirees Increase in projected benefit obligation due to change in actuarial assumptions Q1. What is the employee benefit expense? a. 1,255,000 b. 1,540,000 c. 970,000 d. 925,000 Q2. What is the net remeasurement gain? a. 200,000 b. 150,000 c. 350,000 d. 50,000



4,750,000 1,250,000 5,500,000 850,000 925,000 6% 485,000 1,350,000 925,000 150,000



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Q3. What is the prepaid/accrued benefit cost on December 31? a. 480,000 prepaid b. 480,000 accrued c. 320,000 prepaid d. 320,000 accrued 8. Ana Company provided the following information during 2020: January 1 December 31 Fair value of plan assets 6,000,000 7,900,000 Projected benefit obligation 5,000,000 5,900,000 Prepaid/accrued benefit cost- surplus 1,000,000 2,000,000 Asset ceiling 700,000 1,200,000 Effect of asset ceiling 300,000 800,000 During the current year, the following data are gathered: Current service cost Past service cost Actual return on plan assets Decrease in projected benefit obligation due change in actuarial assumptions Discount rate



700,000 200,000 900,000 500,000 10%



Q1. What is the employee benefit expense? a. 830,000 b. 900,000 c. 800,000 d. 870,000 Q2. What is the net remeasurement gain? a. 330,000 b. 800,000 c. 300,000 d. 500,000 9. On January 1, 2020, Kris Company had a projected benefit obligation of P10,000,000 and a pension fund with a fair value of P9,200,000. The entity provided the following information during the current year: Current service cost Actual return on pension fund Benefits paid to retirees Contribution to pension fund Discount rate Expected return on pension fund



1,200,000 250,000 1,100,000 1,050,000 9% 10%



Q1. What is the pension expense for the current year? a. 1,272,000 b. 2,100,000 c. 1,850,000 d. 1,050,000 Q2. What is the fair value of pension fund on December 31? a. 9,400,000 b. 9,450,000 c. 8,350,000 d. 9,150,000 Q3. What is the projected benefit obligation on December 31? a. 11,000,000 b. 12,100,000 c. 11,200,000 d. 10,100,000 Q4. What is the remeasurement gain or loss on December 31? a. 578,000 gain b. 578,000 loss c. 250,000 gain d. 250,000 loss



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Q5. What is the pension asset or liability on December 31? a. 1,600,000 liability b. 1,600,000 asset c. 800,000 liability d. 800,000 asset 10. Kelly Company provided the following information related to a defined benefit plan for the year ended December 3, 2020: Current service cost Benefits paid Contribution to the fund



30,000 31,000 21,000



Fair value of plan assets: January 1 December 31



2,100,000 2,400,000



Projected benefit obligation January 1 December 31



2,200,000 2,500,000



Past service cost the current year



115,000



On January 1, 2020, the discount rate and expected rate of return are 5% and 7% respectively. On January 1, 2019, the discount rate and expected rate of return are 6% and 8% respectively. Q1. What amount should be recognized as employee benefit expense for the current year? a. 150,000 b. 145,000 c. 115,000 d. 140,000 Q2. What is the actual return on plan assets? a. 310,000 b. 147,000 c. 163,000 d. 341,000 Q3. What is the actuarial loss arising from the increase in projected benefit obligation? a. 191,000 b. 300,000 c. 185,000 d. 76,000 Q4. What is the net measurement gain or loss on December 31, 2020? a. 281,000 gain b. 281,000 loss c. 129,000 gain d. 129,000 loss Q5. What amount should be reported as prepaid or accrued benefit cost on December 31, 2020? a. 150,000 accrued b. 150,000 prepaid c. 100,000 accrued d. 100,000 prepaid 11. Kelly Company provided the following information for 2020: January 1 December 31 Fair value of plan assets 2,600,000 3,000,000 Projected benefit obligation 2,000,000 2,100,000 Prepaid/accrued benefit cost-surplus 600,000 900,000 Asset ceiling 200,000 300,000 Effect of asset ceiling 400,000 600,000 Current service cost 100,000 Contribution to the plan 350,000 Benefits paid 150,000 Discount rate 10%



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Q1. What is the actual return on plan assets for the current year? a. 200,000 b. 350,000 c. 150,000 d. 260,000 Q2. What is the actuarial gain due to decrease in PBO? a. 50,000 b. 40,000 c. 30,000 d. 0 Q3. What is the employee benefit expense for 2020? a. 200,000 b. 100,000 c. 80,000 d. 40,000 Q4. What is the net remeasurement loss in 2020? a. 110,000 b. 220,000 c. 270,000 d. 170,000 12. Kimberly Company provided the following information pertaining to the pension plan for the current year: Projected benefit obligation on January 1 Assumed discount rate Service cost Pension benefits paid



7,200,000 10% 1,800,000 1,500,000



If no change in actuarial estimate occurred in the current year, what is the projected obligation on December 31? a. 6,420,000 b. 7,500,000 c. 7,920,000 d. 8,220,000 13. Kimberly Company provided the following plan information for the current year: January 1 Projected benefit obligation 3,500,000 Accumulated benefit obligation 2,800,000 During the year Pension benefits paid to retired employees 250,000 December 31 Projected benefit obligation 4,200,000 Accumulated benefit obligation 3,100,000 Discount or settlement rate



10%



There is no change in actuarial assumptions during the year. What is the current service cost for the current year? a. 600,000 b. 950,000 c. 250,000 d. 270,000 14. Ivan Company provided the following information: January1 December 31 Fair value of plan assets 3,500,000 3,900,000 Market related value of plan assets 2,800,000 2,900,000 Contribution to the plan 280,000 Benefits paid to retirees 250,000 What is the actual return on plan assets for the current year? a. 400,000 b. 370,000 c. 430,000 d. 100,000



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15. Anna Company amended the pension plan at the beginning of the current year. Before amendment After amendment Accumulated benefit obligation 950,000 1,425,000 Projected benefit obligation 1,300,000 1,900,000 What is the total amount of past service cost as a result of the amendment? a. 950,000 b. 600,000 c. 475,000 d. 125,000 16. On January 1, 2020, Ivan Company established a noncontributory defined benefit plan covering all employees and contributed P1,000,000 to the plan . On December 31, 2020, the entity determined that the current service cost and interest expense on the benefit obligation totaled P620,000. The discount rate was 10%. There was no remeasurement gain or loss during the year. What amount should be reported on December 31, 2020 as prepaid pension cost? a. 280,000 b. 380,000 c. 480,000 d. 620,000 17. On January 1, 2020, Ivan Company adopted a defined benefit plan. The current service cost of P750,000 was fully funded at the end of 2020. Past service cost was funded by a contribution of P300,000 in 2020. Past service cost was P120,000 for 2020. What is the prepaid pension cost on December 31, 2020? a. 180,000 b. 300,000 c. 420,000 d. 540,000 18. Cleo Company had the following balances relating to the defined benefit plan on December 31, 2020: Fair value of plan assets Projected benefit obligation Asset ceiling



37,000,000 33,000,000 2,500,000



What is the prepaid benefit cost on December 31, 2020? a. 4,000,000 b. 1,500,000 c. 2,500,000 d. 0 What is the effect on asset ceiling? a. 4,000,000 c. 2,500,000



b. 1,500,000 d. 0



19. On December 31, 2020, Cleo Company provided the following information: Fair value of plan assets 3,450,000 Accumulated benefit obligation 4,300,000 Projected benefit obligation 5,700,000 What is the accrued liability on December 31, 2020? a. 5,700,000 b. 2,250,000 c. 1,400,000 d. 850,000



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20. Cleo Company provided the following information pertaining to the defined benefit pension plan for the current year: Prepaid pension cost, January 1 20,000 Current service cost 190,000 Interest expense on PBO 380,000 Interest income and actual return on plan assets 400,000 Past service cost during the year 500,000 Employer contribution 400,000 What is the accrued pension cost at year-end? a. 250,000 b. 290,000 c. 270,000 d. 400,000