Question

In: Accounting

Question 1 In a defined contribution pension plan, the retirement benefits to the employee are not...

Question 1 In a defined contribution pension plan, the retirement benefits to the employee are not defined.

True or False

Question 2 Saved Employees are not allowed to make contributions to a defined contribution pension plan.

True or False

Question 3 Current service cost is usually the largest single component of pension expense under a defined benefit pension plan.

True or False

Question 4 In a defined contribution plan, employers run the risk of high pension contributions.

True or False

Question 5 An increase in current service cost would cause an increase in pension obligations.  

True or False

Question 6 The payment of pension benefits to retirees would result in an increase in pension plan obligations.

True or False

Question 7 When pension plan assets exceed pension plan obligations, the plan is said to be in a overfunded position.

True or False

Question 8 The difference between the pension plan assets at fair value and the defined benefit obligation is referred to as the net defined benefit element to be reported on the statement of financial position.  

True or False

Question 9 An overfunded status in a defined pension benefit plan means that there is a cash shortage in the plan.

True or False

Solutions

Expert Solution

Sorry for editing answer as incomplete answer got submitted due to techical issues.

1.This statement is true as defined contribution pension plan allows employees to contribute a fixed amount or fixed

percentage of their pay checks to an account for retirement . The amount of contribution that employee will get is not fixed as the amount of employees contribution and also the return on amount the plan will earn on investments is not fixed .

2. any employee can contribute to defined contribution plan . thus this statement is false

3. true , under defined pension plan it depended on lot of factors as employee age, its maximum salary drawn during his service period and maximum years served in organisation. thus service cost is the major component

4. False , in a defined contribution plan , employees run the risk of high pension contribution as the return which they will get depend on the income earned by investments

5 true, amount ot pension obligation depends on age, length of his term in a company and cost his services . thus if cost of service increase employers contibution has to increase and thus burden will increase

6.False, payment of pension benefits to employees will have no increase in pension plan obligation as employer pays a fixed sum every month onbasis of salary, age and employment years of employees. After retirement employess get benefit from fund house

7.An overfunded position is when pension house has more assets as compared to liabilities. Thus it is true that pension plan exceed pension obligation

8.True, the difference between pension plan assets at fair value and defined benefit obligation is net defined benefit

9. false, an overfunded status means that company has already saved more than what its obligations are.


Related Solutions

Question 26 Explain the difference between a defined benefit pension plan and a defined contribution pension...
Question 26 Explain the difference between a defined benefit pension plan and a defined contribution pension plan. Also explain why the accounting for the two types of plans is so different. Hint: you do not need to explain the details of pension accounting.
What is the difference between a Defined Benefit Pension Plan and a Defined Contribution Pension Plan.?...
What is the difference between a Defined Benefit Pension Plan and a Defined Contribution Pension Plan.? Why have Defined Contribution Plans become more popular? Froman employees perspective, which one do you think is more attractive?
Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the...
Differentiate between a defined contribution pension plan and a defined benefit pension plan. Explain how the employer’s obligation differs between the two types of plans.
What are the advantages and disadvantages for defined benefit pension plan and a defined contribution pension...
What are the advantages and disadvantages for defined benefit pension plan and a defined contribution pension plan each compared to the other?
(1)An employer may account for a pension plan using a defined-contribution plan or a defined- benefit...
(1)An employer may account for a pension plan using a defined-contribution plan or a defined- benefit plan: (a) In two paragraphs, please explain the difference in these plans and (b) who will bear the risk of loss under each plan. What entries (debits and credits) will be made by the employer for pension expense under a defined-contribution plan and how will the amount for pension expense be determined What entries (debits and credits) will be made by the employer for...
Retirement plans: Julio works for a company with a defined benefits (DB) pension plan, which pays...
Retirement plans: Julio works for a company with a defined benefits (DB) pension plan, which pays 3.1% of his last year's salary for each year of employment. He plans to retire after 35 years and expects his salary to be $180,000 in his last year of work. While he will be working during these 35 years, he thinks he can earn 14% every year on his investments. After his retirement, he annually needs 75% of his income in his last...
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to:                         
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to:                              1.7% × Service years × Final year’s salary Stanley Mills was hired by Clark at the beginning of 1997. Mills is expected to retire at the end of 2041 after 45 years of service. His retirement is expected to span 15 years. At the end of 2016, 20 years after being hired, his salary is $85,000. The company’s actuary projects Mills’s salary to be $320,000...
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to:                         
Clark Industries has a defined benefit pension plan that specifies annual retirement benefits equal to:                              1.5% × Service years × Final year’s salary Stanley Mills was hired by Clark at the beginning of 1997. Mills is expected to retire at the end of 2041 after 45 years of service. His retirement is expected to span 15 years. At the end of 2016, 20 years after being hired, his salary is $90,000. The company’s actuary projects Mills’s salary to be $370,000...
4. Unlike defined-benefit pension plan assets, defined-contribution pension plan assets: A. are held by the individual...
4. Unlike defined-benefit pension plan assets, defined-contribution pension plan assets: A. are held by the individual participants in income-producing investment accounts. B. are reported in the sponsoring company’s financial statements. C. must be invested entirely in the sponsoring company’s securities. D. All of the above are true. E. None of the above is true.
1.) Explain the difference between “defined-benefit” retirement plans and “defined-contribution” retirement plan. Which approach is better?...
1.) Explain the difference between “defined-benefit” retirement plans and “defined-contribution” retirement plan. Which approach is better? Why? 2.) Discuss the various components of the National Social Security Program. Explain the extent of its coverage and it’s membership. Explain how it is financed, how it pays benefits to its members. What it’s solvency. Provide recommendations for long term sustainability. Please source
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT