1. The obligation of a defined benefit pension plan would be reduced by:

Select one:

a. cash contribution to the pension plan

b. returns of the pension assets

c. payments of pension benefits to retired employees

d. amortization of prior service cost

2. The current accounting for pensions

Select one:

a. is on an accrual basis and total pension assets and liabilities are reported on the balance sheet.

b. is on a cash basis and the funded status is reported on the balance sheet.

c. is on a partial accrual base and only the funded status is reported on the balance sheet.

d. none of the above.

3. Alternative methods exist for the measurement of the pension obligation. Which measure requires the use of future salaries in its computation and is the FASB's choice of pension obligation?

Select one:

a. Vested benefit obligation

b. Accumulated benefit obligation

c. Projected benefit obligation

d. Restructured benefit obligation

4. When a company amends a pension plan, for accounting purposes, prior service costs should be

Select one:

a. treated as a prior period adjustment because no future periods are benefited.

b. amortized in accordance with procedures used for income tax purposes.

c. recorded in other comprehensive income (PSC).

d. reported as an expense in the period the plan is amended.

5. Under SFAS 158 (ASC 715), delayed recognition of prior service cost as pension expense achieves:

Select one:

a. Income averaging.

b. Expense averaging.

c. Income optimization.

d. Income smoothing.

6. The amortization of net gain/loss:

Select one:

a. is performed every year.

b. is performed only when it is more than 10% of the fair value of pension assets.

c. is performed only when it is more than 10% of the larger of the fair value of pension assets or the projected pension benefit obligation.

d. is perpetually deferred.

7. The amortization of prior service cost:

Select one:

a. is performed every year.

b. is performed only when it is more than 10% of the fair value of pension assets.

c. is performed only when it is more than 10% of the larger of the fair value of pension assets. or the projected pension benefit obligation.

d. is perpetually deferred.

8. According to the FASB, recognition of liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

Select one:

a. requires recognition of an asset.

b. requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount.

c. recommends recognition of an asset but does not require such recognition.

d. does not permit recognition of an asset.

Answer rating: 100% (QA)

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