Business & Finance

Scallion Company received the following reports of its defined benefit pension plan for the current calendar year:

The long-term expected rate of return on plan assets is 10%. Assuming no other data are relevant, what is the pension expense for the year?
A. $197,000.
B. $227,000.
C. $172,000.
D. $202,000.

8. Colombo Enterprises has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $14,000; interest cost, $6,000; benefits paid for the year, $9,000; ending PBO, $89,000; and the expected return on plan assets, $10,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a debit to pension expense for:

A. $20,000.
B. $15,000.
C. $12,000.
D. $10,000.

9. A statement of comprehensive income does not include:

A. Net income.
B. Losses from the return on assets exceeding expectations.
C. Losses from changes in estimates regarding the PBO.
D. Prior service cost.

10. Gains and losses can occur with pension plans when:

A. Either the PBO or the return on plan assets turns out to be different than expected.
B. Either the ABO or the return on plan assets turns out to be different than expected.
C. Either the PBO, the ABO, or the return on plan assets turns out to be different than expected.
D. Either the PBO or the ABO turns out to be different than expected.

11. Castillo Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginning PBO, $75,000; service cost, $18,000; interest cost, $5,000; benefits paid for the year, $9,000; ending PBO, $89,000; the expected return on plan assets, $10,000; and cash deposited with pension trustee, $17,000. There were no other pension-related costs. The journal entry to record the annual pension costs will include a credit to the PBO for:

A. $13,000.
B. $17,000.
C. $18,000.
D. $23,000.

12. At December 31, 2012, Mongo, Inc., reported in its balance sheet a net loss of $3 million related to its pension plan. The actuary for Mongo at the end of 2013 increased her estimate of future salary levels. Mongo’s entry to record the effect of this change will include:

A. A debit to loss-OCI and a credit to PBO.
B. A debit to PBO and a credit to loss-OCI.
C. A debit to pension expense and a credit to PBO.
D. A debit to pension expense and a credit to loss-OCI.

Solution:

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