Chapter 6

Chapter 6
Employee Benefits Part 2

NAME: Date: Professor: Section: Score:
QUIZ 1:
1. Which of the following components should be included in the calculation of net defined
benefit cost recognized for a period by an employer sponsoring a defined benefit pension plan?
Actual Return Amortization of on Plan Assets, Unrecognized Prior
Interest
If Any Service cost, If Any
Cost
a. No No Yes
b. Yes No Yes c. Yes Yes No d. Yes Yes Yes
2. Which of the following concepts for postretirement benefit plans is comparable to the
projected unit credit method of pension plans?
a. Accrued benefit method pro-rated on service
b. Expected Postretirement Benefit Obligation (EPBO)
c. Actual return on plan assets
d. Expected return on plan assets
3. Which of the following statements is incorrect?

4. a. Minimum (corridor) amortization of net unrecognized gain or loss is allowed for
postretirement benefit plans.
b. Gains and losses on settlement of defined benefit retirement plans are recognized immediately.
c. Actuarial gains and losses are recognized immediately.
d. Past service costs are recognized immediately.
5. The interest cost component of the net defined benefit cost is determined using
a. the settlement rate of interest.
b. the rate of return on high quality corporate bonds
c. both a and b.
d. neither a or b.
6. Financial reporting standards for pension currently in effect
a. allow both the accrued benefit and projected benefit methods.
b. allow only the accrued benefit method/ projected unit credit method.
c. allow only the projected benefit method.
d. do not allow either the accrued benefit or projected benefit methods.
7. Which of the following is not correct? a. PAS 19 does not include any provisions for the
recognition of an additional
minimum liability. b. PAS 19 does not allow for the recognition of a net pension asset equal to
the computed surplus in some circumstances. c. PAS 19 requires the 10% corridor amount in
calculating the amortization of deferred gains and losses. d. PAS 19 requires settlement gains and
losses to be recognized immediately as part of comprehensive income.
7. These are changes in the present value of the defined benefit obligation resulting from
experience adjustments and the effects of changes in actuarial assumptions. a. Past service cost c.
Settlement gains and losses b. Actuarial gains and losses d. Interest cost
8. All of the following are demographic assumptions except: a. future medical costs b.
mortality, both during and after employment c. rates of employee turnover, disability and early
retirement d. claim rates under medical plans
9. According to PAS 19, which of the following is not a financial assumption? a. the
discount rate b. future salary and benefit levels c. the expected rate of return on plan assets d. the
proportion of plan members with dependents who will be eligible for benefits
10. According to PAS 19, the rate used to discount post-employment benefit obligations shall
be determined by reference to market yields at the end of the reporting period on a. risk-free rate
c. current bank rate b. high quality corporate bonds d. effective interest rate
“Education is the passport to the future, for tomorrow belongs to those who
prepare for it today.” - Malcolm X

How much is the current service cost? a. 120,000 b. 200,000 c. 160,000 d. 220,
Use the following information for the next two questions: PELLUCID CLEAR Co. agrees to
provide lump-sum retirement benefits to employees equal to 6% of final salary for each year of
service. Information on an employee is shown below: Average annual salary level on January
1, 20x1 ₱12,000, Average annual salary increase starting January 1, 20x2 and every year
thereafter. 3% Average service lives before entitlement to retirement benefits (January 1, 20x1
to December 31, 20x5) 5 years Discount rate per year 10%
4. How much is the current service cost in 20x2? a. 553,492 b. 669,724 c. 618,724 d. 608,
5. How much is the present value of the defined benefit obligation on December 31, 20x2?
a. 1,298,437 b. 1,217,680 c. 1,085,710 d. 1,908,
“And we know that in all things God works for the good of those who love him, who have been
called according to his purpose.” – (Romans 8:28)
 END -
DownloadSave
Page |1
Chapter 6
Employee Benefits Part 2
NAME: Date:
Professor: Section: Score:
QUIZ 1:
1. Which of the following components should be included in the calculation of net
defined benefit cost recognized for a period by an employer sponsoring a defined
benefit pension plan?
Actual Return Amortization of
on Plan Assets, Unrecognized
Prior
Interest
If Any Service cost, If
Any
Cost
a. No No Yes
b. Yes No Yes
c. Yes Yes No
d. Yes Yes Yes
2. Which of the following concepts for postretirement benefit plans is comparable to
the projected unit credit method of pension plans?
a. Accrued benefit method pro-rated on service
b. Expected Postretirement Benefit Obligation (EPBO)
c. Actual return on plan assets
d. Expected return on plan assets
3. Which of the following statements is incorrect?
a. Minimum (corridor) amortization of net unrecognized gain or loss is allowed for
postretirement benefit plans.
b. Gains and losses on settlement of defined benefit retirement plans are
recognized immediately.
c. Actuarial gains and losses are recognized immediately.
d. Past service costs are recognized immediately.
4. The interest cost component of the net defined benefit cost is determined using
a. the settlement rate of interest.
b. the rate of return on high quality corporate bonds
c. both a and b.
d. neither a or b.
5. Financial reporting standards for pension currently in effect
a. allow both the accrued benefit and projected benefit methods.
b. allow only the accrued benefit method/ projected unit credit method.
c. allow only the projected benefit method.
d. do not allow either the accrued benefit or projected benefit methods.
6. Which of the following is not correct?
a. PAS 19 does not include any provisions for the recognition of an additional
Page |2
minimum liability.
b. PAS 19 does not allow for the recognition of a net pension asset equal to the
computed surplus in some circumstances.
c. PAS 19 requires the 10% corridor amount in calculating the amortization of
deferred gains and losses.
d. PAS 19 requires settlement gains and losses to be recognized immediately as
part of comprehensive income.
7. These are changes in the present value of the defined benefit obligation resulting
from experience adjustments and the effects of changes in actuarial assumptions.
a. Past service cost c. Settlement gains and losses
b. Actuarial gains and losses d. Interest cost
8. All of the following are demographic assumptions except:
a. future medical costs
b. mortality, both during and after employment
c. rates of employee turnover, disability and early retirement
d. claim rates under medical plans
9. According to PAS 19, which of the following is not a financial assumption?
a. the discount rate
b. future salary and benefit levels
c. the expected rate of return on plan assets
d. the proportion of plan members with dependents who will be eligible for benefits
10.According to PAS 19, the rate used to discount post-employment benefit obligations
shall be determined by reference to market yields at the end of the reporting period
on
a. risk-free rate c. current bank rate
b. high quality corporate bonds d. effective interest rate
“Education is the passport to the future, for tomorrow belongs to those who
prepare for it today.” - Malcolm X

Chapter 6

Uploaded by

Copyright:

Available Formats

Chapter 6

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter 6

Uploaded by

Copyright:

Available Formats

Chapter 6

Employee Benefits Part 2

3. Which of the following statements is incorrect?

prepare for it today.” - Malcolm X

You might also like