21.The corridor is defined as
a.1% of the greater of the actual projected benefit obligation or the fair value of the plan assets.
b.5% of the greater of the actual projected benefit obligation or the fair value of the plan assets.
c.10% of the greater of the actual projected benefit obligation or the fair value of the plan assets.
d.15% of the greater of the actual projected benefit obligation or the fair value of the plan assets.
22.In June 2011, the IASB amended IAS 19, Employee Benefits, and significantly changed the method of accounting for defined benefit plan pensions. Regarding these changes, which of the following statements is false?
a.Prior to this amendment, the basic principles of accounting for defined benefit plans under IFRS were the same as U.S. GAAP.
b.Under IAS 19, prior service cost is immediately recognized on the income statement as an expense, while under U.S. GAAP prior service cost isrecognized in other comprehensive income and reported as a component ofaccumulated other comprehensive income on the balance sheet.
c.The changes in the amendment to IAS 19 make it less likely that GAAP will change to converge with IFRS for pension accounting.
d.The major result of the IASB amendments was to remove many of the smoothing devices in pension accounting.
23.In the computation of pension expense, interest cost is the
a.expected increase in the plan assets due to investing activities.
b.increase in the projected benefit obligation due to the passage of time.
c.actuarial present value of benefits.
d.expected return on plan assets.
24.Which of the following pension-related definitions is not correct?
a.Vested benefits are payments that are not contingent on the employee's continuing in the service of the employer.
b.Present value is the current worth of an amount or amounts payable or receivable in the future.
c.Actuarial assumptions are those made by actuaries concerning future events affecting pension costs.
d.Service cost is the amount paid annually to a funding agency under an unfunded pension plan.
25.Benefits for which the employee's right to receive a present or future pension benefit is no longer contingent on remaining in the service of the employer are called
d.prior service benefits.
26.The Lucas Company offers employees a defined contribution pension plan. In 2015, Lucas contributed $175,000 to the plan, which paid $195,000 to retired employees. Which of the following statements is true?
a.Lucas will record an accrued liability of $20,000.
b.Lucas will report pension expense of $175,000.
c.Lucas will recognize prior service cost of $20,000.
d.Lucas will recognize actuarial gains and losses on the plan over current and future periods.
27.The cost of retroactive benefits granted in a plan amendment or at the initial adoption of a pension plan is called
a.accumulated benefit cost.
b.service cost benefits.
c.prior service cost.
28.Which of the following would not be a component of pension expense?
a.prior service cost amortization
d.return on assets
29.Disclosures for a defined benefit pension plan should include which of the following?
number of beneficiaries
reconciliation of the ending value of the projected benefit obligation
reconciliation of the ending fair value of the plan assets
the composition of plan assets
the discount rate used
expected long-term rate of return on plan assets
a.I, II, III, IV
b.I, III, V, VI
c.II, III, V, VI
d.III, IV, V, VI
30.Which of the following is not a component of pension expense to be reported on a company's income statement?
b.unrecognized past service cost
d.expected return on plan assets