CPA CH17
On January 1, 2015, Oil Trading Co.'s defined benefit pension plan had plan assets with a fair
value of $750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that amortization of prior service cost is $25,000, how much will Oil Trading Co.
recognize as pension expense for 2015?
Multiple Choice
$24,000
45,000
$60,000
$75,250 ✔✔$75,250
Explanation
Pension expense consists of service cost of $24,000, plus interest at 9% of $875,000 or $78,750,
plus amortization of prior service cost of $25,000, minus the return on plan assets of 7% of
$750,000 or $52,500 for a net amount of $75,250.
On January 1, 2015, Jeff Co.'s defined benefit pension plan had plan assets with a fair value of
$750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
, Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that pension expense is $80,000, what will be the amount in plan assets at December
31, 2015?
Multiple Choice
$708,750
$735,000
$787,500
$795,000 ✔✔$787,500
Explanation
Plan assets at the end of the year will consist of the beginning balance of $750,000, plus
interest earned at 7% of $750,000 or $52,500, plus contributions to the plan of $45,000, and
minus distributions from the plan of $60,000 for a net ending balance of $787,500.
Chapter 17 Roger CPA Question 17-4
On January 1, 2015, Paul Co.'s defined benefit pension plan had plan assets with a fair value of
$750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that pension expense is $80,000, what will be the projected benefit obligation at
December 31, 2015?
On January 1, 2015, Oil Trading Co.'s defined benefit pension plan had plan assets with a fair
value of $750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that amortization of prior service cost is $25,000, how much will Oil Trading Co.
recognize as pension expense for 2015?
Multiple Choice
$24,000
45,000
$60,000
$75,250 ✔✔$75,250
Explanation
Pension expense consists of service cost of $24,000, plus interest at 9% of $875,000 or $78,750,
plus amortization of prior service cost of $25,000, minus the return on plan assets of 7% of
$750,000 or $52,500 for a net amount of $75,250.
On January 1, 2015, Jeff Co.'s defined benefit pension plan had plan assets with a fair value of
$750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
, Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that pension expense is $80,000, what will be the amount in plan assets at December
31, 2015?
Multiple Choice
$708,750
$735,000
$787,500
$795,000 ✔✔$787,500
Explanation
Plan assets at the end of the year will consist of the beginning balance of $750,000, plus
interest earned at 7% of $750,000 or $52,500, plus contributions to the plan of $45,000, and
minus distributions from the plan of $60,000 for a net ending balance of $787,500.
Chapter 17 Roger CPA Question 17-4
On January 1, 2015, Paul Co.'s defined benefit pension plan had plan assets with a fair value of
$750,000, and a projected plan obligation of $875,000. In addition:
Actual and expected return on plan assets - 7%
Interest cost - 9%
Service costs - $24,000
Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Assuming that pension expense is $80,000, what will be the projected benefit obligation at
December 31, 2015?
