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Unformatted text preview: 1. In a defined-contribution plan, a formula is used that A) defines the benefits that the employee will receive at the time of retirement. B) ensures that pension expense and the cash funding amount will be different. C) requires an employer to contribute a certain sum each period based on the formula. D) ensures that employers are at risk to make sure funds are available at retirement. Points Earned: 3.0/3.0 Correct Answer(s): C 2. Kraft, Inc. sponsors a defined-benefit pension plan. The following data relates to the operation of the plan for the year 2011. Service cost $200,000 Contributions to the plan 220,000 Actual return on plan assets 180,000 Projected benefit obligation (beginning of year) 2,400,000 Market-related and fair value of plan assets (beginning of year) 1,600,000 The expected return on plan assets and the settlement rate were both 10%. The amount of pension expense reported for 2011 is A) $200,000. B) $260,000. C) $280,000. D) $440,000. Points Earned: 0.0/3.0 Correct Answer(s): C 3. When a company amends a pension plan, for accounting purposes, prior service costs should be A) treated as a prior period adjustment because no future periods are benefited. B) amortized in accordance with procedures used for income tax purposes. B) amortized in accordance with procedures used for income tax purposes....
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- Spring '10