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Pension expense: Kasper Inc. Kathy's Kittens

1. Presented below is pension information related to Woods, Inc. for the year 2013.

Service cost $76,000
Interest on projected benefit obligation $47,000
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 2013 is (Points : 5)
$159,000.
$117,000.
$105,000.
$141,000.

2. Kasper, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2013.

Service cost $260,000
Contributions to the plan $250,000
Actual return on plan assets $240,000
Projected benefit obligation (beginning of year) $2,700,000
Fair value of plan assets (beginning of year) $2,900,000

The expected return on plan assets and the settlement rate were both 9%. The amount of pension expense reported for 2013 is:
$503,000.00.
$260,000.00.
$242,000.00.
$263,000.00.

3. A pension asset is reported when:
the fair value of the pension plan assets is less than the accumulated benefit obligation.
the fair value of the pension plan assets is less than the accumulated benefit obligation and a prior service cost exists.
the accumulated benefit obligation is less than the fair value of the pension plan assets.
the projected benefit obligation is less than the fair value of the pension plan assets.

4. Kathy's Kittens, Inc. has provided the following information for their post-retirement benefits plan for 2013.

Service cost $860,000
Discount rate 10%
APBO, January 1, 2013 $5,200,000
EPBO, January 1, 2013 $5,600,000
Average remaining service to full eligibility 20 years
Average remaining service to expected retirement 25 years

The amount of post-retirement expense for 2013 is:
$1,380,000.
$1,588,000.
$1,640,000.
$1,420,000.

Solution Summary

Your tutorial is attached in Excel with instructional comments about how to compute pension expenses and what to ignore in the dataset.

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