Chapter 9, Problem 3DIC

Suppose that Blake Companys total pretax difference from a change to FIFO was 100,000 and the company pays a bonus of 5% of its income before income taxes and bonus to employees. If Blake pays an additional bonus | based on the change in income, would it recognize any expense? If so, when and how much?

Assume that actual returns and expected returns to plan assets in a defined benefit pension plan are +$10 and +$12, respectively. What is the effect in the current period on pension expense?   Select One: a.Pension expense is increased by $10   b.Pension expense is reduced by $10   c.Pension expense is reduced by $12   d.None of the listed answers

In March of 2017, the FASB updated the standards for reporting pension costs. Under the old standards, the components of pension cost, such as service cost (the cost of benefits earned in the current year), interest cost (the increase in pension costs due to the passage of time), the expected retum on plan assets the amount that managers anticipate they will earn on the plan's investments), and other costs were all reflected in operating income. Under the new fules (which are now in effect), service costs will be reported as an perting cost and al the other pension costs and any expected refums will be reported as non-operating items. What will be the change in operating income for GM? Should this change matter to investors?

_1. If a company has an underfunded defined-benefit pension plan: A. no payment may be made to retirees until the company deposits all the necessary assets into the pension fund. B. the difference between fund assets and amounts owed to retirees will still be paid by the federal Pension Benefit Guaranty Corporation. C. the value of the PBO must be precisely the same as the amount of assets set aside by the company to pay pension benefits. D. All the above are true. E. None of the above is true. 2. Which of the following is a TRUE sentence with regard to a defined-contribution pension plan? A. Both the employer and employee must make annual payments to the plan. B. It does not matter to the employee whether the company has a defined- benefit plan or a defined-contribution plan, because the employee still has retirement benefits. C. A 401(k) plan is an example of a defined-contribution plan. D. All the above are true. E. None of the above is true. _3. The Public Company Accounting…

JWS Corporation has a defined benefit pension plan. JWS reported a net pension liability in last year’s balance sheet. This year, the company revised its estimate of future salary levels causing its projected benefit obligation estimate to decline by $8. Also, the $16 million actual return on plan assets was less than the $18 million expected return. As a result a. the net pension liability will decrease by $8 million. b. the statement of comprehensive income will report a $2 million gain and an $8 million loss. c. the net pension liability will increase by $6 million. d. accumulated other comprehensive income will increase by $6 million.

Calculate the amount that J&J’s retirement fund obligations are underfunded as of each year-end. How much of the underfunding is reported on the company’s balance sheet?

How do I go about calculating pension payouts to determine a company's financial obligation? Additional info is below: Postretirement BenefitsPeyton Approved has revised its postretirement plan. It will now provide health insurance to retired employees. Management has requested that you report the short- and long-term financial implications of this. The company is currently employing 60, and actuaries estimate that the company has a pension liability of $107,041.70. The estimated cost of retired employees’ health insurance is $43,718.91. Prepare adjusting entries for the pension liability and the health insurance liability

Bill Haley is learning about pension accounting. He is convinced that in years when companies record liability gains and losses, total comprehensive income will not be affected. Is Bill correct? Explain.

The Employee Retirement Income Security Act (ERISA) requires that companies fund defined-benefit plans, but no such requirement exists for other postretirement benefits such as health insurance. Considering the characteristics of retirement benefits as compared to the characteristics of other postretirement benefits, what impact does this have on a company's financial statements?