Exam (elaborations)
ACCOUNTING 234 Quiz 6 (Latest Update) Questions and Verified Answers (GRADED A)
- Course
- ACC 234
- Institution
- South University
ACCOUNTING 234 Quiz 6 (Latest Update) Questions and Verified Answers (GRADED A)
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tion 1On January 1, 20X8, the net defined benefit liability on the financial statements of Abel Co. was
$250,000. Abel follows IFRS.
Abel’s controller provided the following information to you for the period of January 1 to December 31,
20X8:
· Total benefits in the amount of $10,000 were paid evenly throughout the year.
· The company contributed $200,000 during the year.
· The current service costs were determined to be $50,000.
· The net interest cost on the defined benefit obligation was $30,000.
· There were no remeasurement gains or losses during the year.
What is the balance of the net defined benefit liability on Abel’s December 31, 20X8, financial
statements?
a) $120,000
b) $130,000
c) $330,000
d) $530,000
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estion 2
A new associate at your firm, Charles and Row LLP, has emailed you in a panic. “I need help! I have
gathered the following items for the calculation of a defined benefit pension plan expense for a period
and I am not sure which item doesn’t belong. The company reports under IFRS.”
Which item should the associate remove from his calculation?
a) The current service cost as determined by the actuarial present value of benefits attributed to employees’ s
during that period
b) The net interest cost on the defined benefit liability
c) Past service cost arising from a plan amendment
d) Benefits paid to retirees during the period
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estion 3
Good Company Ltd., a public company, initiated a defined benefit pension plan on January 1, 20X6. The
plan defines the pension benefits for future service, as well as provides benefits for past service.
An actuary calculated the defined benefit obligation (DBO) at January 1, 20X6, to be $550,000. It is now
December 31, 20X8, and you are provided with the following information for 20X8:
Current service cost for 20X8 $125,000
Interest cost on DBO 34,000
Actual return on plan assets 28,500
Present value of DBO, January 1, 20X8 680,000
Contributions paid to the plan in 20X8 130,000
Retirement benefits paid to retirees in 20X8 22,000
Remeasurement loss, December 31, 20X8 on DBO 11,000
What is the balance in the DBO at December 31, 20X8? (This would be the present value calculated by
the actuary.)
a) $703,000
b) $806,000
c) $828,000
d) $850,000
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estion 4
On January 1, 20X8, the net defined benefit liability on the financial statements of Abel Co. was
$250,000. Abel follows IFRS.
Abel’s controller provided the following information to you for the period of January 1 to December 31,
20X8:
, Total benefits in the amount of $10,000 were paid evenly throughout the year.
The company contributed $200,000 during the year.
The current service costs were determined to be $50,000.
The net interest cost on the DBO was $30,000.
There were no remeasurement gains or losses during the year.
What is the pension expense for the year ended December 31, 20X8?
a) $20,000
b) $70,000
c) $80,000
d) $90,000
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estion 5
Dickson Manufacturing Corp., a company reporting under IFRS, has a defined benefit pension plan.
Pension information concerning the 20X5 and 20X6 fiscal years is presented below (in millions):
Information provided by the pension plan actuary
DBO, December 31, 20X5 $1,800
Past service cost from a plan amendment made January 2, 20X6 400
Current service cost for 20X6 520
20X6 interest cost on DBO, based on 10% discount rate 180
20X6 remeasurement gain on DBO arising from a change in estimate 250
Benefits paid 0
Funding for the year 0
Information provided by the pension plan trustee
Fair value of plan assets, January 1, 20X6 $1,600
Actual return on plan assets 224
, What is the pension expense for 20X6?
a) $500
b) $540
c) $920
d) $940
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estion 6
Dickson Manufacturing Corp., a company reporting under IFRS, has a defined benefit pension plan.
Pension information concerning the 20X5 and 20X6 fiscal years is presented below (in millions):
Information provided by the pension plan actuary
DBO, December 31, 20X5 $1,800
Past service cost from a plan amendment made January 2, 20X6 400
Current service cost for 20X6 520
20X6 interest cost on DBO, based on 10% discount rate 180
20X6 remeasurement gain on DBO arising from a change in estimate 250
Benefits paid 0
Funding for the year 0
Information provided by the pension plan trustee
Fair value of plan assets, January 1, 20X6 $1,600
Actual return on plan assets 224
What is the balance of the plan assets as at December 31, 20X6?
a) $1,376
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