Under IFRS, which of the following statements is true regarding accounting for defined benefit pension plan settlements? Select one: a. Settlements increase the defined benefit obligation (DBO). b. Any gain or loss on a plan settlement is presented as part of other comprehensive income c. The difference between the change in the DBO and the change in the plan assets as a result of the plan settlement is recognized as a gain or loss. d. Settlements increase the plan assets

Under IFRS, which of the following statements is true regarding accounting for defined benefit pension plan settlements? Select one: a. Settlements increase the defined benefit obligation (DBO). b. Any gain or loss on a plan settlement is presented as part of other comprehensive income c. The difference between the change in the DBO and the change in the plan assets as a result of the plan settlement is recognized as a gain or loss. d. Settlements increase the plan assets

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 3BIC

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Which of the following is not a component of pension expense? a. amount funded b. service cost c. expected return on plan assets d. interest cost
Net interest cost is a component of pension expense under IFRS. How is net interest cost calculated? Select one: O a. The increase in the DBO over the period, net of the increase in the plan assets over the period. O b. Interest expense on the DBO, net of actual interest income earned on plan assets. O c. Interest expense on the defined benefit obligation (DBO), net of expected interest income earned on plan assets. O d. The increase in the DBO over the period, net of the increase in the plan assets over the period.
For a defined benefit pension plan, pension expense consists of five components, for which the formula is Service Cost – Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost – Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost – Interest Cost + Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss).
When a defined benefit pension fund has assets whose value is below the present value of its expected future obligations, the plan is Answers: a. Overfunded b. Underfunded c. Fully funded d. Defined contribution
Under IFRS, any difference between the pension expense and the payments into the pension fund plan assets should be reflected in Select one: a. a contra account to the net defined benefit liability/asset. b. an accrued actuarial liability. c. the net pension liability/asset. d. a note to the financial statements only. e. None of the above.
look over the three most important components of the pension expense. The treatment of expected and actual return on plan assets, particularly when the actual return is greater than the expected, the amortization of prior service cost and the unexpected gain/ loss. Discuss the accounting treatment of these items with suitable examples.
What are the four basic components of pension expense? Select one: A. Service cost, benefits paid, expected return on plan assets, and amortization of deferred amounts B. Service cost, benefits paid, actual return on plan assets, and amortization of deferred amounts C. Service cost, interest cost, actual return on plan assets, and amortization of deferred amounts D. Service cost,interest cost, expected return on plan assets, and amortization of deferred amounts E. None of the above
Which of the following statements regarding asset ceilings for overfunded and underfunded pension plans is true? A. For underfunded pension plans, the issue is whether the sponsoring entity can realize the benefits of the underfunding either through reducing or stopping its contributions in the future or through withdrawing surplus funds. B. An overfunded pension results in a net defined benefit liability on the SFP. C. An underfunded pension has a fair value of plan assets that is less than the DBO. D. An asset ceiling is the minimum benefit that the employer can realize by reducing or stopping future contributions to a defined benefit pension plan.
The return on plan assets is the increase in plan assets (at fair value), adjusted for contributions to the plan and benefits paid during the period. How is the return included in the calculation of the periodic pension expense?
Under PAS 26 (Accounting and Reporting by Retirement Benefit Plans), investments held by retirement benefit plans should be stated at which of the following value in their statement of net assets? Fair Value Value in use Net Realizable Value Orig cost less impairment
The net pension liability (PBO minus plan assets) is increased by: A. Service cost. B. Expected return on plan assets. C. Amortization of prior service cost. D. Cash contributions to plan assets.
Depending on when an unfunded pension liability is to be paid, it will be classified on the balance sheet as either a long-term or a current liability.