Question 1

List and describe the five components of annual pension expense.

Accepted Answer

1.Service cost-Service cost is the incre...

Question 2

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

Accepted Answer

A)  retiree benefit obligation
B)  projected benefit obligation
C)  accumulated benefit obligation
D)  vested benefit obligationE) A) and D)
F) None of the above

Question 3

When compensation is recognized under an equity classified award,expiration of stock options is treated as ________.

Accepted Answer

A)  a prior period adjustment
B)  an adjustment to compensation expense
C)  an adjustment to shareholder's equity
D)  a change in accounting estimateE) C) and D)
F) A) and B)

Question 4

An employee will not redeem a liability-classified award when the stock is out of the money.

Accepted Answer

A) True 
 B)False

Question 5

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Accepted Answer

A) True 
 B)False  True

Question 6

The projected benefit obligation (PBO) is decreased by ________.

Accepted Answer

A)  payment of retirement benefits
B)  a return on plan assets that is higher than expected
C)  an increase in the average life expectancy of employees
D)  a decrease in the actuary's assumed discount rateE) C) and D)
F) A) and D)

Question 7

A net pension liability is the excess of the projected benefit obligation over the plan assets.

Accepted Answer

A) True 
 B)False

Question 8

If a pension plan is overfunded,it means that the ________.

Accepted Answer

A)  ABO exceeds plan assets
B)  PBO is less than plan assets
C)  ABO is less than plan assets
D)  PBO exceeds plan assetsE) A) and B)
F) None of the above

Question 9

Which of the following is a way of measuring the pension benefit obligation?

Accepted Answer

A)  employer benefit obligation
B)  retiree benefit obligation
C)  projected benefit obligation
D)  future benefit obligationE) C) and D)
F) All of the above C

Question 10

A company's defined benefit pension plan had a projected benefit obligation (PBO) of $350,000 on January 1,Year 1.During Year 1,pension benefits paid were $60,000,The discount rate for the plan for Year 1 was 11%.Service cost for the year was $90,000.Plan assets (fair value) increased during the year by $50,000.What was the PBO at December 31,Year 1?

Accepted Answer

A)  $290,000
B)  $368,500
C)  $380,000
D)  $418,500E) A) and D)
F) None of the above

Question 11

An employee who receives an equity-classified award has the right to receive shares of stock.

Accepted Answer

A) True 
 B)False

Question 12

An underfunded pension plan increases a company's leverage.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a characteristic of a defined benefit pension plan?

Accepted Answer

A)  It raises few accounting issues for employers.
B)  Retirement benefits are based on the plan benefit formula.
C)  It is simple to construct.
D)  Retirement benefits are contingent on how much an employee has accumulated in a retirement account.E) A) and D)
F) A) and C)

Question 14

Net pension liability is increased by ________.

Accepted Answer

A)  employer contributions to plan assets
B)  service costs
C)  expected return on plan assets
D)  amortization of prior service costsE) A) and B)
F) B) and C) B

Question 15

A stock option plan is generally revalued whenever there is a change in the estimated percentage of options that will be forfeited.

Accepted Answer

A) True 
 B)False

Question 16

Compensation expense associated with stock options is ________.

Accepted Answer

A)  based upon the book value of the options
B)  based upon the estimated fair value of the options
C)  recorded on the date that the options are granted
D)  allocated as expense over the time period until the options expireE) A) and C)
F) None of the above

Question 17

List and explain the factors that are important in accounting for stock-based compensation plans.

Accepted Answer

1.Exercise price or strike price-the fix...

Question 18

Which of the following is a characteristic of the accumulated benefit obligation measurement?

Accepted Answer

A)  It considers only vested employees.
B)  It does not use projected future salary levels.
C)  It is required by GAAP for measurement of the pension obligation.
D)  It considers only current employees.E) A) and B)
F) All of the above

Question 19

An employee will generally exercise stock options only when the current market price is above the exercise price of the option.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a characteristic of a defined contribution plan?

Accepted Answer

A)  Employee contributions are typically based upon salary levels.
B)  Employers must make contributions for prior service costs to a defined contribution plan.
C)  Pension plan assets draw interest that may be used to reduce annual contributions to the plan.
D)  Employers bear the risk of loss on pension fund assets.E) All of the above
F) A) and B)

Exam 20: Accounting for Employee Compensation and Benefits

List and describe the five components of annual pension expense.

Correct Answer
verified
1.Service cost-Service cost is the incre...
View Answer

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

Correct Answer
verified

When compensation is recognized under an equity classified award,expiration of stock options is treated as ________.

Correct Answer
verified

An employee will not redeem a liability-classified award when the stock is out of the money.

Correct Answer
verified

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Correct Answer
verified
True

The projected benefit obligation (PBO) is decreased by ________.

Correct Answer
verified

A net pension liability is the excess of the projected benefit obligation over the plan assets.

Correct Answer
verified

If a pension plan is overfunded,it means that the ________.

Correct Answer
verified

Which of the following is a way of measuring the pension benefit obligation?

Correct Answer
verified
C

Correct Answer
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An employee who receives an equity-classified award has the right to receive shares of stock.

Correct Answer
verified

An underfunded pension plan increases a company's leverage.

Correct Answer
verified

Which of the following is a characteristic of a defined benefit pension plan?

Correct Answer
verified

Net pension liability is increased by ________.

Correct Answer
verified
B

A stock option plan is generally revalued whenever there is a change in the estimated percentage of options that will be forfeited.

Correct Answer
verified

Compensation expense associated with stock options is ________.

Correct Answer
verified

List and explain the factors that are important in accounting for stock-based compensation plans.

Correct Answer
verified
1.Exercise price or strike price-the fix...
View Answer

Which of the following is a characteristic of the accumulated benefit obligation measurement?

Correct Answer
verified

An employee will generally exercise stock options only when the current market price is above the exercise price of the option.

Correct Answer
verified

Which of the following is a characteristic of a defined contribution plan?

Correct Answer
verified

Exam 20: Accounting for Employee Compensation and Benefits

List and describe the five components of annual pension expense.

Correct Answerverified1.Service cost-Service cost is the incre...View AnswerShow Answer

The portion of the obligation than plan participants are entitled to receive regardless of their continued employment is called the ________.

Correct AnswerverifiedShow Answer

When compensation is recognized under an equity classified award,expiration of stock options is treated as ________.

Correct AnswerverifiedShow Answer

An employee will not redeem a liability-classified award when the stock is out of the money.

Correct AnswerverifiedShow Answer

The difference between pension plan assets and the PBO is equal to the funded status of the plan.

Correct AnswerverifiedTrue

The projected benefit obligation (PBO) is decreased by ________.

Correct AnswerverifiedShow Answer

A net pension liability is the excess of the projected benefit obligation over the plan assets.

Correct AnswerverifiedShow Answer

If a pension plan is overfunded,it means that the ________.

Correct AnswerverifiedShow Answer

Which of the following is a way of measuring the pension benefit obligation?

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

An employee who receives an equity-classified award has the right to receive shares of stock.

Correct AnswerverifiedShow Answer

An underfunded pension plan increases a company's leverage.

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a defined benefit pension plan?

Correct AnswerverifiedShow Answer

Net pension liability is increased by ________.

Correct AnswerverifiedB

A stock option plan is generally revalued whenever there is a change in the estimated percentage of options that will be forfeited.

Correct AnswerverifiedShow Answer

Compensation expense associated with stock options is ________.

Correct AnswerverifiedShow Answer

List and explain the factors that are important in accounting for stock-based compensation plans.

Correct Answerverified1.Exercise price or strike price-the fix...View AnswerShow Answer

Which of the following is a characteristic of the accumulated benefit obligation measurement?

Correct AnswerverifiedShow Answer

An employee will generally exercise stock options only when the current market price is above the exercise price of the option.

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a defined contribution plan?

Correct AnswerverifiedShow Answer

Correct Answer
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1.Service cost-Service cost is the incre...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

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Correct Answer
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Correct Answer
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C

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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1.Exercise price or strike price-the fix...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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