a. The amount to be received at retirement depends on actuarial calculations. Defined Benefit plan b. Forfeitures can be allocated to the remaining participants' accounts. c. Requires greater reporting requirements and more actuarial and administrative costs. d. May exclude employees who begin employment within five years of normal retirement age. e. Annual addition to each employee's account may not exceed the smaller of $58,000 or 100% of the employee's salary. f. The final benefit to a participant depends upon investment performance.

a. The amount to be received at retirement depends on actuarial calculations. Defined Benefit plan b. Forfeitures can be allocated to the remaining participants' accounts. c. Requires greater reporting requirements and more actuarial and administrative costs. d. May exclude employees who begin employment within five years of normal retirement age. e. Annual addition to each employee's account may not exceed the smaller of $58,000 or 100% of the employee's salary. f. The final benefit to a participant depends upon investment performance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following statements are reasons employers may choose to delay eligibility of employees to participate in a retirement plan? 1. Employees do not start earning benefits until they become plan participants (except in defined benefit plans, which may count prior service). 2. Since turnover is generally highest for employees in their first few years of employment and for younger employees, it makes sense from an administrative standpoint to delay their eligibility. A. 1 only. B. 2 only. C. Both 1 and 2. D. Neither 1 nor 2.
* Your answer is incorrect. The following data are for the pension plan for the employees of Cullumber Company. Accumulated benefit obligation Projected benefit obligation Plan assets (at fair value) AOCL - net loss Settlement rate (for year) Expected rate of return (for year) 1/1/25 $5034000 O $624000. $424000. • $334000. $534000. 5434000 4634000 0 12/31/25 $5234000 5658000 6034000 994000 9% 7% 12/31/26 $6834000 7434000 6658000 1034000 8% 6% Cullumber's contribution was $874000 in 2026 and benefits paid were $784000. Cullumber estimates that the average remaining service life is 15 years. The actual return on plan assets in 2026 was
35. In a defined-benefit plan, a formula is used that defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee. defines the benefits that the employee will receive at the time of retirement. requires that pension expense and the cash funding amount be the same.
A company that sponsors a defined benefit plan records an entry to debit OCI-Pension Gain/Loss for $5,000 and credit Plan Assets. The company uses the corridor approach to amortize Accumulated OCI-Pension Gain/Loss. This entry indicates that Select one: O a. The expected return on plan assets exceeded actual return on plan assets. O b. The actual return on plan assets exceeded the expected return on plan assets. O c. The beginning balance in Accumulated OCI-Pension Gain/Loss exceeded the corridor. O d. The beginning balance in Accumulated OCI-Pension Gain/Loss did not exceed the corridor. e. a and c f. b and d OO
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Warrick Boards calculated pension expense for its underfunded pension plan as follows: ($ in millions) Service cost $ 224 Interest cost 150 Expected return on the plan assets ($100 actual, less $10 gain) (90 ) Amortization of prior service cost 8 Amortization of net loss 2 Pension expense $ 294 Required: Which elements of Warrick’s balance sheet are affected by the components of pension expense? What are the specific changes in these accounts?
a. Compute pension expense for 2020. Amortize the full pension gain/loss over the average service life of 15 years using the straight-line method. b. Compute PBO at December 31st, 2020. c. Compute the fair value of plan assets at December 31st, 2020. Please don't provide solution in an image based thanku
Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee under the following circumstances: a. No employee contributions are made to the plan. b. The pension plan provides for matching employee contributions. a. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when no employee contributions are made to the plan. O A. The distributions are only taxable to the employee once the taxpayer is retired. B. The distributions are only taxable to the employee once the taxpayer reached 65 of age. C. The distributions are fully taxable to the employee when the payment is received. D. The distributions are not taxable to the employee when the payment is received. b. Explain how distributions from a qualified pension plan, which are made in the form of annuity payments, are reported by an employee when the pension plan provides for matching…
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