Problem 1: The minimum pension liability that must be shown on the balance sheet of the plan sponsor is the:
- accumulated benefit obligation.
- excess of the accumulated benefit obligation over the plan assets at fair value.
- excess of the projected benefit obligation over the plan assets at fair value.
- projected benefit obligation.
Problem 2: A major difference between accounting for postretirement benefit plans and pension plans is that:
- postretirement benefit plans are not required to be funded.
- postretirement benefit plans do not need to show a liability for accumulated postretirement benefit obligation on the plan sponsor's balance sheet.
- postretirement benefit plans do not deduct the return of plan assets when funded.
- there is no accumulated postretirement benefit obligation.
Problem 3: If a pension plan amendment results in a $1,500,000 increase in the projected benefit obligation, the pension expense will:
- be decreased by $1,500,000 over the remaining service period of the future beneficiaries.
- be increased by $1,500,000 in the year of the amendment.
- be increased by $1,500,000 over the remaining service period of the future beneficiaries.
- not be affected.
Problem 4: The current year amortization amount of accumulated unrecognized losses in a pension plan will:
- decrease the pension expense.
- have no effect on pension expense.
- increase the pension expense.
- never be accounted for and reported.
Problem 5: TRM Corporation established a defined benefit pension plan in Year 5. In Year 8 the following information is available. Service cost = $45,000. Interest cost = $60,000. Actual return on plan assets = $35,000. Expected return on plan assets = $40,000. Net amortization of unrecognized losses = $15,000. If the company contributes $65,000 cash to the pension plan trustee, which one of the following journal entries properly records the payment?
DR pension expense 45,000
DR prepaid pension cost 20,000
CR cash 65,000
DR pension expense 60,000
DR prepaid pension cost 5,000
CR cash 65,000
DR pension expense 65,000
CR cash 65,000
DR pension expense 80,000
CR cash 65,000
CR unfunded accrued pension cost 15,000