Question

Intermediate Accounting 2 - Chapter 20:

Multiple Choice

1. A pension liability is reported when

a. the accumulated benefit obligation is less than the fair value of pension plan assets.

b. the projected benefit obligation exceeds the fair value of pension plan assets.

c. accumulated other comprehensive income exceeds the fair value of pension plan assets.

d. the pension expense reported for the period is greater than the funding amount for the same period.

2. The relationship between the amount funded and the amount reported for pension expense is as follows:

a. pension expense will be more than the amount funded.

b. pension expense will be less than the amount funded.

c. pension expense must equal the amount funded.

d. pension expense may be greater than, equal to, or less than the amount funded.

3. Prior service cost is amortized on a

a. straight-line basis over the expected future years of service.

b. straight-line basis over 15 years.

c. years-of-service method or on a straight-line basis over the average remaining service life of active employees.

d. straight-line basis over the average remaining service life of active employees or 15 years, whichever is longer.

4. Gains and losses that relate to the computation of pension expense should be

a. amortized over a 15 year period.

b. recorded currently as an adjustment to pension expense in the period incurred.

c. recorded only if a loss is determined.

d. recorded currently and in the future by applying the corridor method which provides the amount to be amortized.

5. A pension fund gain or loss that is caused by a plant closing should be:

a. recognized as a prior period adjustment.

b. spread over the current year and future years.

c. recognized immediately as a gain or loss on the plant closing.

d. charged or credited to the current pension expense.

Answer 1

Answer

1 option c is correct a pension liability is reported when

C accumulated other comprehensive income exceeds the fair value of pension plan assets.

2.

Option d is correct the relationship between the amount funded and the the amount reported for pension expenses is as follows

D pension expenses may be greater than equal to less than the the amount funded

3

Option c is correct. Prior service cost is is amortize on a

C real of service method or on a straight line basis over the the average remaining service life of of active employee

4

Option d is correct

5

Option A is correct