Net interest cost is a component of pension expense under IFRS. How is net interest cost calcul Select one: O a. The increase in the DBO over the period, net of the increase in the plan assets over the period. O b. Interest expense on the DBO, net of actual interest income earned on plan assets. c. Interest expense on the defined benefit obligation (DBO), net of expected interest incor earned on plan assets. O d. The increase in the DBO over the period, net of the increase in the plan assets over the period.

Net interest cost is a component of pension expense under IFRS. How is net interest cost calcul Select one: O a. The increase in the DBO over the period, net of the increase in the plan assets over the period. O b. Interest expense on the DBO, net of actual interest income earned on plan assets. c. Interest expense on the defined benefit obligation (DBO), net of expected interest incor earned on plan assets. O d. The increase in the DBO over the period, net of the increase in the plan assets over the period.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter16: Advanced Topics Concerning Complex Auditing Judgments

Section: Chapter Questions

Problem 41RSCQ

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The net pension liability (PBO minus plan assets) is increased by: A. Service cost. B. Expected return on plan assets. C. Amortization of prior service cost. D. Cash contributions to plan assets.
What are the four basic components of pension expense? Select one: A. Service cost, benefits paid, expected return on plan assets, and amortization of deferred amounts B. Service cost, benefits paid, actual return on plan assets, and amortization of deferred amounts C. Service cost, interest cost, actual return on plan assets, and amortization of deferred amounts D. Service cost,interest cost, expected return on plan assets, and amortization of deferred amounts E. None of the above
The return on plan assets is the increase in plan assets (at fair value), adjusted for contributions to the plan and benefits paid during the period. How is the return included in the calculation of the periodic pension expense?
look over the three most important components of the pension expense. The treatment of expected and actual return on plan assets, particularly when the actual return is greater than the expected, the amortization of prior service cost and the unexpected gain/ loss. Discuss the accounting treatment of these items with suitable examples.
what is the difference between Accumulated Benefit Obligation and Projected Benefit Obligation? How do you determine the Plan Asset/Liability? How do you compute the Pension Expense?
Any past service costs should be included in the a) pension expense of past periods. b) pension expense of the current period. c) pension expense of current and future periods. d) plan assets.
For a defined benefit pension plan, pension expense consists of five components, for which the formula is Service Cost – Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost – Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost + Interest Cost + Expected Return on Plan Assets – Amortization of Prior Service Cost +(–) Gain (Loss). Service Cost – Interest Cost + Expected Return on Plan Assets + Amortization of Prior Service Cost +(–) Gain (Loss).
b. How does each component of pension expense affect pension expense during the period (increase, decrease, or uncertain)? c. What is the difference between the accumulated pension obligation and the projected pension obligation? d. What determines whether a pension plan is underfunded or overfunded?
In computing the interest component of pension expense, what interest rates may be used?
1. What is the actual return on pension plan assets? 2. What is the amount of actuarial gain or loss that will be taken to other comprehensive income? if gain positive amount, if loss negative amount Example: gain --> 1,000 loss --> (1,000)
When a defined benefit pension fund has assets whose value is below the present value of its expected future obligations, the plan is Answers: a. Overfunded b. Underfunded c. Fully funded d. Defined contribution
Which component of Kensington’s periodic pension cost would be shown in OCI ratherthan P&L?A . Service costB . Net interest (income) expenseC . Remeasurements