Financial Statement Reporting
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21. In 2007, Admire Company accrued, for financial statement reporting, estimated losses on disposal of unused plant facilities of $1,500,000. The facilities were sold in March 2008 and a $1,500,000 loss was recognized for tax purposes. Also in 2007, Admire paid $100,000 in premiums for a two-year life insurance policy in which the company was the beneficiary. Assuming that the enacted tax rate is 30% in both 2007 and 2008, and that Admire paid $780,000 in income taxes in 2007, the amount reported as net deferred income taxes on Admire's balance sheet at December 31, 2007, should be a
a. $420,000 asset.
b. $360,000 asset.
c. $360,000 liability.
d. $450,000 asset.
22. Presented below is pension information related to Tyler, Inc. for the year 2008:
Service cost $72,000
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 2008 is
a. $108,000.
b. $144,000.
c. $162,000.
d. $120,000.
23. Koble, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2008.
Service cost $ 200,000
Contributions to the plan 220,000
Actual return on plan assets 180,000
Projected benefit obligation (beginning of year) 2,400,000
Market-related and fair value of plan assets (beginning of year) 1,600,000
The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2008 is
a. $200,000.
b. $260,000.
c. $280,000.
d. $440,000.
24. Presented below is information related to Marley Inc. pension data for 2008.
Service cost $900,000
Actual return on plan assets 210,000
Interest on projected benefit obligation 390,000
Amortization of unrecognized net loss 90,000
Amortization of unrecognized prior service cost 165,000
Expected return on plan assets 180,000
What amount should be reported for pension expense in 2008?
a. $1,365,000
b. $1,335,000
c. $1,515,000
d. $1,155,000
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Solution Summary
This solution contains step-by-step calculations to determine which answer is correct. Cost tables are included with brief explanations for further explanations.
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