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     42.     When a company adopts a pension plan, prior service costs should be charged to
a.     operations of current and future periods.
b.     operations of prior periods.
c.     operations of the current period.
d.     retained earnings.

     43.     When a company amends a pension plan, for accounting purposes, prior service costs should be
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.     amortized under accrual accounting to current and future periods benefited.
d.     treated as an expense of the period during which the funding occurs.

     44.     Prior service cost is amortized on a
a.     straight-line basis over the expected future years of service.
b.     years-of-service method or on a straight-line basis over the average remaining service life of active employees.
c.     straight-line basis over 15 years.
d.     straight-line basis over the average remaining service life of active employees or 15 years, whichever is longer.
     S45.     Whenever a defined-benefit plan is amended and credit is given to employees for years of service provided before the date of amendment
a.     both the accumulated benefit obligation and the projected benefit obligation are usually greater than before.
b.     both the accumulated benefit obligation and the projected benefit obligation are usually less than before.
c.     the expense and the liability should be recognized at the time of the plan change.
d.     the expense should be recognized immediately, but the liability may be deferred until a reasonable basis for its determination has been identified.

     S46.     The unexpected gains or losses that result from changes in the projected benefit obligation are called
          Asset     Liability
          Gains & Losses     Gains & Losses
a.          Yes     Yes
b.          No     No
c.          Yes     No
d.          No     Yes

     47.     Unrecognized gains and losses that relate to the computation of pension expense should be
a.     recorded currently as an adjustment to pension expense in the period incurred.
b.     recorded currently and in the future by applying the corridor method which provides the amount to be amortized.
c.     amortized over a 15-year period.
d.     recorded only if a loss is determined.

     48.     Market-related asset value is used to determine the corridor and to calculate the expected return on plan assets.
               Expected Return
          Corridor     on Plan Assets
a.          Yes     Yes
b.          Yes     No
c.          No     Yes
d.          No     No

     49.     A pension fund gain or loss that is caused by a plant closing should be
a.     recognized immediately as a gain or loss on the plant closing.
b.     spread over the current year and future years.
c.     charged or credited to the current pension expense.
d.     recognized as a prior period adjustment.

     50.     When a company switches from a defined-benefit to a defined-contribution plan, any gain arising must generally be reported
a.     in the current and prospective periods on a straight-line basis.
b.     as a prior period adjustment.
c.     currently as a gain.
d.     in the current and prospective periods on a declining-balance method over the average remaining service life of existing employees.


     51.     A minimum liability for pension expense is reported when
a.     the projected benefit obligation exceeds the fair value of pension plan assets.
b.     the accumulated benefit obligation exceeds the fair value of pension plan assets.
c.     the pension expense reported for the period is greater than the funding amount for the same period.
d.     vested benefits exceed the fair value of pension plan assets.

     52.     An intangible asset (deferred pension cost) is created when
a.     the accumulated benefit obligation exceeds the fair value of pension plan assets, but accrued pension cost and unrecognized prior service cost is greater than this excess.
b.     the accumulated benefit obligation exceeds the fair value of pension plan assets, but accrued pension cost is less than this excess, and unrecognized prior service cost exists.
c.     pension plan assets at fair value exceed the accumulated benefit obligation.
d.     pension plan assets at book value exceed the projected benefit obligation.

     53.     Which of the following statements is correct?
a.     There is an account titled Additional Pension Liability.
b.     There is an account titled Minimum Pension Liability.
c.     Accrued pension cost and additional pension liability should be reported separately on the balance sheet.
d.     None of these.

     S54.     According to the FASB, immediate recognition of a liability (referred to as the minimum liability) is required when the accumulated benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the accumulated benefit obligation, the Board
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.

     55.     Which of the following disclosures of pension plan information would not normally be required by Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits”?
a.     The major components of pension expense
b.     The amount paid from the pension fund to retirees during the period
c.     The funded status of the plan and the amounts recognized in the financial statements
d.     The rates used in measuring the benefit amounts

     56.     The main purpose of the Pension Benefit Guaranty Corporation is to
a.     require minimum funding of pensions.
b.     require plan administrators to publish a comprehensive description and summary of their plans.
c.     administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities.
d.     all of these.


     *57.     Which of the following statements is true about postretirement health care benefits?
a.     They are generally funded.
b.     The benefits are well-defined and level in dollar amount.
c.     The beneficiary is the retiree, spouse, and other dependents.
d.     The benefit is payable monthly.

     *58.     Which of the following disclosures of postretirement benefits would not be required by professional pronouncements?
a.     Postretirement expense for the period
b.     A schedule showing changes in postretirement benefits and plan assets during the year
c.     The amount of the actuarial liability for postretirement benefits
d.     The assumptions and rates used in computing the EPBO and APBO

     *59.     At the beginning of the year of adoption of Statement of Financial Accounting Standards No. 106, a transition amount is computed as the excess of the
a.     expected postretirement benefit obligation over the fair value of plan assets or vice versa.
b.     accumulated postretirement benefit obligation over the fair value of plan assets or vice versa.
c.     expected postretirement benefit obligation over the fair value of plan assets, but not vice versa.
d.     accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa.

     *60.     Postretirement benefits may include all of the following except
a.     severance pay to laid-off employees.
b.     dental care.
c.     legal and tax services.
d.     tuition assistance.

     *61.     Which of the following statements is correct?
a.     The period over which postretirement benefits are accrued is called the attribution period.
b.     The accrual period generally begins when an employee is hired.
c.     The accrual period generally ends on the date the employee is eligible to receive the benefits and ceases to earn additional benefits.
d.     All of these.

     *62.     Which of the following statements about the expected postretirement benefit obligation (EPBO) is not correct?
a.     The EPBO is an actuarial present value.
b.     The EPBO is recorded in the accounts.
c.     The EPBO is used in measuring periodic expense.
d.     All of these are correct.

     *63.     Which of the following statements about the immediate recognition of a transition amount is not correct?
a.     The transition amount is recognized in the income statement as the effect of a change in accounting principle.
b.     The transition amount is recognized in the income statement net of tax.
c.     Restatement of previously issued annual financial statements is permitted.
d.     The transition amount is recognized in the balance sheet as a long-term liability.
     *64.     Which of the following is a significant item not recognized in the accounts and in the financial statements?
a.     Accumulated postretirement benefit obligation
b.     Postretirement benefit plan assets
c.     Expected postretirement benefit obligation
d.     All of these.

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