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Study Resources (Accounting)

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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16.3   Learning Objective 3 1) What is the balance of the deferred tax liability due to the rate change? Opening taxable temporary differences 400,000 Tax rate (prior year) 25% Tax rate (current year) 30% A) 100,000 debit B) 100,000 credit C) 120,000 debit D) 120,000 credit 2) What is the effect on the deferred tax balance as a result of the rate.
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19) The following data represent the differences between accounting and tax income for Seafood Imports Inc., whose pre-tax accounting income is $650,000 for the year ended December 31. The company's income tax rate is 45%. Additional information relevant to income taxes includes the following. a. Capital cost allowance of $270,000 exceeded.
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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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16.2   Learning Objective 2 1) Which of the following is an example of a "permanent difference"? A) Warranty provisions. B) Dividends on corporations. C) Depreciation on capital assets. D) Completed contract method. 2) Which of the following is not an example of a "temporary difference"? A) Membership fees that are not deductible. B) Advances received on rent revenue. C).
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31) Under the accrual method, what is the effect of the current year temporary difference in F2015? F2014 F2015 Deferred tax liability 27,500 Revenue 150,000 Taxable income 105,000 Tax rate 25% 35% A) 11,000 B) 42,500 C) 52,500 D) 63,500 32) Under the accrual method, what is the tax expense in F2014? F2013 F2014 F2015 Deferred tax liability 27,000 Revenue 100,000 150,000 Taxable income 95,000 105,000 Tax rate 30% 35% 35% A) 4,500 B) 30,500 C) 35,000 D) 39,500 33) A company earns $390,000 in pre-tax.
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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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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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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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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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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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17.1   Learning Objective 1 1) Which of the following best describes a "defined benefit plan"? A) High returns in the pension plan result in higher benefit payments to the employees in the future. B) A pension plan that specifies how much funds the employee needs to contribute. C) A plan that requires the employer.
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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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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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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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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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21) What is the deferred tax liability under the deferral method for F2015? F2013 F2014 F2015 Income before tax 120,000 110,000 150,000 Taxable income 85,000 95,000 105,000 Tax rate 30% 25% 35% A) $52,500 B) $36,750 C) $27,500 D) $15,750 22) Which statement is correct? A) The deferral and accrual methods produce the same tax expense when tax rates are constant. B) The deferral method applies new tax rates to accumulated tax.
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16.4   Learning Objective 4 1) Which statement is correct? A) Income tax system treats income and losses symmetrically. B) Income tax system treats income and losses asymmetrically. C) When a company has a loss, a refund is received equal to the loss multiplied by the tax rate. D) A loss carryforward has immediate cash flow.
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17.2   Learning Objective 2 1) Which statement about "defined contribution plans" is not 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 may be capitalized to the cost of inventory. D).
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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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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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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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10) Indicate whether the item will result in a deductible temporary difference, taxable temporary difference or neither. Item Deductible temporary difference Taxable temporary difference Neither Rent revenue collected in advance that is taxable in the year received CCA that exceeds depreciation expense for property, plant, and equipment Membership dues that are not deductible Percentage of completion income that.
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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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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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13) During its first year of operations, Karol Corp. reported the following information: •Income before income taxes for the year was $550,000 and the tax rate was 35%. •Depreciation expense was $100,000 and CCA was $50,000. •Warranty expense was reported at $20,000, while actual cash paid out was $10,000. •$25,000 of expenses included in.
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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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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) 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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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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21) The following information relates to the accounting income for Ontario Uranium Enterprises (QUE) for the current year ended December 31. Income before taxes$850,000 Membership fees—non deductible for tax20,000 Depreciation and depletion expense380,000 CCA470,000 Loss on disposal of equipment (see additional info below)75,000 Tax rate30% During the year, the company sold one of its machines with carrying.
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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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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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