Question 10. 10. A pension asset is reported when (Points : 4)
the accumulated benefit obligation exceeds the fair value of pension plan assets.
the accumulated benefit obligation exceeds the fair value of pension plan assets, but a prior service cost exists.
pension plan assets at fair value exceed the accumulated benefit obligation.
pension plan assets at fair value exceed the projected benefit obligation.
Question 11. 11. Which of the following is not a characteristic of a defined-contribution pension plan? (Points : 4)
The employer's contribution each period is based on a formula.
The benefits to be received by employees are determined by an employee’s highest compensation level defined by the terms of the plan.
The accounting for a defined-contribution plan is straightforward and uncomplicated.
The benefit of gain or the risk of loss from the assets contributed to the pension fund is borne by the employee.
Question 12. 12. Robinson Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent? (Points : 4)
A change in accounting estimate.
A change in reporting entity.
A change due to error.
A change in accounting principle.
Question 13. 13. Presented below is pension information related to Woods, Inc. for the year 2015:
Service cost $82,000
Interest on projected benefit obligation 54,000
Interest on vested benefits 24,000
Amortization of prior service cost due to increase in benefits 12,000
Expected return on plan assets 18,000
The amount of pension expense to be reported for 2015 is (Points : 4)
Question 14. 14. The following facts relate to the Patton Co. postretirement benefits plan for 2015:
Service cost $180,000
Interest Expense 135,000
APBO, January 1, 2015 $1,500,000
Benefit payments to employees $115,000
The amount of postretirement expense for 2015 is
(Points : 4)
Question 15. 15. Postretirement benefits may include all of the following, except (Points : 4)
severance pay to laid-off employees.
legal and tax services.
Question 16. 16. On January 1, 2012, Penn Corporation acquired machinery at a cost of $750,000. Penn adopted the double-declining balance method of depreciation for this machinery and had been recording depreciation over an estimated useful life of ten years, with no residual value. At the beginning of 2015, a decision was made to change to the straight-line method of depreciation for the machinery. The depreciation expense for 2015 would be (Points : 4)
Question 17. 17. An example of a correction of an error in previously issued financial statements is a change (Points : 4)
from the FIFO method of inventory valuation to the LIFO method.
in the service life of plant assets, based on changes in the economic environment.
from the cash basis of accounting to the accrual basis of accounting.
from the double-declining balance method of depreciation to the straight-line method.
Question 18. 18. When a company decides to switch from the double-declining balance method to the straight-line method, this change should be handled as a (Points : 4)
change in accounting principle.
change in accounting estimate.
prior period adjustment.
correction of an error.
Question 19. 19. Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of (Points : 4)
Question 20. 20. On December 31, 2015 Dean Company changed its method of accounting for inventory from the weighted average cost method to the FIFO method. This change caused the 2015 beginning inventory to increase by $840,000. The entry to record the cumulative effect of this accounting change, ignoring all tax effects, will also include an (Points : 4)
$840,000 debit to COGS.
$840,000 credit to COGS.
$840,000 debit to Retained Earnings.
$840,000 credit to Retained Earnings.