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Study Resources (Accounting)

18) Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31, 2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317. The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31, 2019,.
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6) Which statement about "defined contribution plans" is correct? A) Pension expense equals the contributions made based on the plan formula. B) Pension expense equals the present value of the future benefits to be paid to the retiree. C) Pension cost cannot be capitalized to the cost of inventory. D) Pension cost may not.
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6) In pension accounting, how are past service costs accounted for under ASPE? A) Recognized in the balance sheet as a liability for the full amount. B) Recognized in the income statement as an expense for the full amount. C) Not recognized, but disclosed in a note. D) Amortized over a specified period and.
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6) Viribana Corporation started operations on March I, 2009. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. Option 1: Lease the equipment for 10 years. Lease payments would be $11,200 per year, due at the beginning of each fiscal.
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11) On July 1, 2010, Jupiter Company leased equipment to Planet Company. The terms of the lease are as follows:   Fair value of leased asset 70,000 Lease payments, due each Jul 1 12,000 Lease term 9 years Economic life of leased asset 10 years Guaranteed residual value 6,000 Lessee's incremental borrowing rate 15% Planet uses straight-line depreciation for its property, plant, and equipment,.
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15) The following are characteristics of a lease: Price of leased asset from manufacturer 312,100 Lease payments 75,000 Lease term 4 years Lease frequency Annual Payment timing End of year Guaranteed residual value 15,000 Interest rate implicit in the lease agreement 5% Requirement: Determine the appropriate classification for this lease for the lessor (who is not the manufacturer) and record the journal entries for the lessor.
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18) A company has a defined benefit pension liability of $1,050,000 at the beginning of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.   Requirement: Determine the value of the defined benefit pension liability at year-end. 19) A company has a defined benefit.
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32) For the following lease, determine the minimum lease payments for the lessee. Annual lease payment at the end of the end $23,000 Lease term 5 Incremental rate 10% Implicit rate (known to lessee) 8% Unguaranteed residual value 5,000 Guaranteed residual value 20,000 A) 91,832 B) 102,711 C) 105,444 D) 108,847 33) For the following lease, determine the minimum lease payments for the lessor. Annual lease payment at.
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6) The following are the characteristics of a lease: Fair value of leased asset 150,000 Lease payments 25,500 Lease term 7 Payment frequency Annual Payment timing End of year Guaranteed residual value None Interest rate implicit in lease 8% Requirement: Determine the present value of minimum lease payments (MLP) and the appropriate classification of this lease for the lessee. 7) The following are the characteristics of a.
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17.3   Learning Objective 3 1) Which statement best explains the meaning of "current service cost"? A) The present value of pension benefits that employees have earned. B) The increase in the present value of obligations from services rendered in the current period. C) The amount of funds deposited with the pension trust in the.
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13) The following are characteristics of a lease: Price of leased asset from manufacturer 312,100 Lease payments 100,000 Lease term 4 years Lease frequency Annual Payment timing End of year Guaranteed residual value 35,000 Interest rate implicit in the lease agreement 14% Requirement: Determine the appropriate classification for this lease for the lessor (who is not the manufacturer) and record the journal entries for the lessor.
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27) Current service cost for a defined benefit pension plan amounted to $7,800,000. This pension plan's assets generated $6,500,000 of income, which exceeded expectations by $550,000. Pension obligations incurred interest cost of $5,500,000, which were above expectations by $280,000. Amortizations during the year included $400,000 for past service cost and.
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14) Here are the terms of a lease agreement: Fair value of leased asset 65,000 Lease term 10 years Payment frequency Annual Payment timing End of year Guaranteed residual value 0 Interest rate implicit in lease (known to lessee) 4% Lessee's incremental borrowing rate 4% Requirement: Determine the amount of lease payment that the lessor would require to lease the asset. 15) Here are the terms of.
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18) The following are some of the characteristics of an asset available for lease: Fair value of leased asset 150,000 Lease term 8 years Payment frequency Annual Payment timing Beginning of year Guaranteed residual value 25,000 Interest rate implicit in lease (not known to lessee) 9% Lessee's incremental borrowing rate 8% Requirements: a. Determine the amount of lease payment that the lessor would require to lease.
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16) Here are the terms of a lease agreement: Fair value of leased asset 150,000 Lease term 8 years Payment frequency Annual Payment timing End of year Guaranteed residual value 5,000 Interest rate implicit in lease (known to lessee) 6% Lessee's incremental borrowing rate 8% Requirements: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.
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12) Salisbury Creamery leases its ice cream making equipment from Little Rock Finance Company under the following lease terms:   •The lease term is five years, non-cancellable, and requires equal rental payments of $56,926 due at the beginning of each year starting January 1, 2011. •Upon inception of the lease on January 1,.
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15) At the beginning of the current year, a pension has assets of $74,500,000 and accrued benefit obligation of $77,500,000. At this time, unamortized actuarial gains were $750,000 on plan assets and $800,000 on plan obligations. The expected average remaining service lives (EARSL) of current employees is 25 years. Requirement: Compute the.
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17) Channel leased equipment to Montage Company on November I, 2010. The terms of the lease are as follows: Lease term 12 years Economic life of leased asset 13 year Fair value of leased asset 105,000 Guaranteed residual value 10,000 Lease payments, due at the end of the year, starting Nov 1, 2011 11,000 Lessee's incremental borrowing rate 5% Montage uses straight-line depreciation.
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20) The following are some of the characteristics of an asset available for lease: Fair value of leased asset 80,000 Useful life 10 years Lease term 7 years Payment frequency Annual Payment timing Beginning of year Guaranteed residual value 10,000 Interest rate implicit in lease (not known to lessee) 10% Lessee's incremental borrowing rate 8% Requirements: a. Determine the amount of lease payment that the lessor would require.
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11) What amount is outside the corridor limit for fiscal 2013? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension assets 5,000,000 3,000,000 Pension obligation 3,200,000 3,500,000 Unamortized actuarial gains 210,000 1,300,000 A) $210,000 B) $290,000 C) $320,000 D) $500,000 12) What amount is outside the corridor limit for fiscal 2014? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension assets 5,000,000 3,000,000 Pension obligation 3,200,000 3,500,000 Unamortized actuarial gains 210,000 1,300,000 A) $0 B) $290,000 C) $350,000 D) $500,000 13) What amount is.
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23) What entry is required for the lessor in a operating lease? A) Gain/loss on asset sale. B) Loan receivable. C) Interest income. D) Depreciation expense. 18.3   Learning Objective 3 1) Which statement is correct about the "guaranteed residual value"? A) It is assurance that the lessee will take care of the property. B) It is provided by.
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32) Axel Corporation has a defined benefit pension plan. At January 1, 2012, the following balances exist: Accrued benefit obligation$2,480,000 Plan assets (at market value)1,880,000 Unamortized past service cost from. plan initiation              210,000 Unrecognized net loss from actuarial gains and losses              348,000 Interest rate on obligations4% For the year ended December 31, 2012, the current service.
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11) A company reported $430,000 of pension expense in its income statement. The balance sheet showed that the pension liability increased by $29,000 over the year.   Requirement: How much cash was paid to the pension trustee during the period? 12) Gander Products has a defined contribution pension plan for its employees. The plan.
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10) The following are some of the characteristics of an asset available for lease:   Fair value of leased asset 120,000 Useful life 10 years Lease term 7 years Payment frequency Annual Payment timing Beginning of year Unguaranteed residual value 10,000 Interest rate implicit in lease (not known to lessee) 15% Lessee's incremental borrowing rate 14% Requirements: a. Determine the amount of lease payment that the lessor would require.
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17) Changing Assumptions Ltd. has the following details related to its defined benefit pension plan as at December 31, 2013: Pension fund assets of $1,900,000 and Actuarial obligation of $1,806,317. The actuarial obligation represents the present value of a single benefit payment of $3,200,000 that is due on December 31, 2019,.
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17.4   Learning Objective 4 1) Which statement is correct? A) The defined benefit liability or asset must be separately identified on the income statement. B) The components of pension expense must be disclosed in the notes to the statements. C) The defined benefit liability or asset must be separately identified on the balance sheet. D).
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8) Bram Masons' balance sheet shows a defined benefit liability of $740,000. Records show that there are $89,000 of past service costs and $610,000 of actuarial gains that remain unamortized. Requirement: Using the pension reconciliation required in Bram's note disclosures, determine the pension plan's surplus or deficit. 9) Feldman has a defined benefit.
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12) What are actuarial losses or gains in a defined benefit plan? A) Plan amendments that retrospectively improve pension plan benefits. B) Expected income earned on the pension plan assets. C) Difference arising between the actual and the expected value of plan assets. D) Differences arising between the actual and expected values of the.
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7) Explain how amounts outside of the "corridor limit" are accounted for in the financial records. 8) What is the corridor limit for fiscal 2014? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension assets 15,000,000 13,000,000 Pension obligation 13,200,000 13,500,000 Unamortized actuarial gains 250,000 1,300,000 A) $50,000 B) $1,300,000 C) $1,350,000 D) $1,500,000 9) What is the corridor limit for fiscal 2013? Balance at Dec 31 Fiscal 2013 Fiscal 2014 Pension.
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8) Here are the terms of a lease agreement: Fair value of leased asset 250,000 Lease term 4 years Payment frequency Annual Payment timing End of year Guaranteed residual value 25,000 Interest rate implicit in lease (known to lessee) 14% Lessee's incremental borrowing rate 16% Requirements: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.
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17.5   Learning Objective 5 1) What is an actuarial loss? A) An unfavourable difference between actual and expected amounts for pension assets. B) A favourable difference between actual and expected amounts for pension assets. C) An unfavourable difference between actual and expected amounts for pension contributions. D) A favourable difference between actual and expected amounts.
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11) Masons' balance sheet shows a defined benefit asset of $740,000. Records show that there are $89,000 of past service costs and $610,000 of actuarial losses that remain unamortized. Requirement: Using the pension reconciliation required in the company's note disclosures, determine the pension plan's surplus or deficit. 12) Feldman has a defined benefit.
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18.1   Learning Objective 1 1) Which statement is not correct? A) A finance lease transfers risks and rewards from the lessor to the lessee. B) The "lessor" is the owner of the asset in a lease arrangement. C) A lease is a written contract that allows another party to use an owner's property. D) The.
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5) The following amortization schedule is for a lease entered into at the start of fiscal 2012 for an asset that will be useful for 5 years. The company uses straight-line depreciation method. Required: Provide the appropriate presentation of this lease in the lessee's balance sheet for December 31, 2013, distinguishing amounts.
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30) Current service cost for a defined benefit pension plan amounted to $7,800,000. This pension plan's assets generated $6,500,000 of income, which exceeded expectations by $570,000. Pension obligations incurred interest cost of $5,000,000, which were above expectations by $280,000. Amortizations during the year included $400,000 for past service cost and.
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6) Here are the terms of a lease agreement: Fair value of leased asset 50,000 Lease term 5 years Payment frequency Annual Payment timing End of year Guaranteed residual value 0 Interest rate implicit in lease (known to lessee) 5% Lessee's incremental borrowing rate 5% Requirements: a. Determine the amount of lease payment that the lessor would require to lease the asset. b. Compute the present value.
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9) Which statement is correct about "agency cost of leasing"? A) The lease payments are lowered to compensate for the agency cost of leasing. B) Shorter lease terms decrease the agency cost of leasing. C) Agency cost of leasing is an illustration of the "moral hazard" problem. D) Agency cost of leasing is an.
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18.4   Learning Objective 4 1) Which statement is correct? A) Lessees prefer finance leases. B) Lessees prefer operating leases. C) Operating leases are more favourable to the lessor in the short term. D) Finance leases are more favourable to the lessee in the short term. 2) Assume that Speery agrees to lease a new machine from.
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8) Cerebral Corporation started operations on March I, 2009. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. Option 1: Lease the equipment for 5 years. Lease payments would be $12,000 per year, due at the beginning of each fiscal.
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10) Boris Corporation started operations on March I, 2009. It needs to acquire a special piece of equipment for its manufacturing operations. It is evaluating two options as follows. Option 1: Lease the equipment for 5 years. Lease payments would be $12,000 per year, due at the beginning of each fiscal.
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24) A company's defined benefit pension plan incurs current service cost of $8,000,000. Expected income on the pension plan's assets amounted to $7,800,000, while actual income was $9,900,000. The interest on the pension obligation was $9,000,000, which matched the actuarial estimates. The pension plan has no past service costs, and.
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21) A company has a defined benefit pension liability of $3,750,000 at the end of the year. The company contributes $5,500,000 to the pension during the year and records a pension expense of $8,200,000.   Requirement: Determine the value of the defined benefit pension liability at the beginning of the year. 22) A company.
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