Question : 51. Flake Corporation sets up a pension plan that legally separate : 1245712

51. Flake Corporation sets up a pension plan that is legally separate from Flake. The pension plan specifies the eligibility of employees, the types of promises to employees, the method of funding, and the pension plan administrator.  Flake Corporation specifies the benefit that employees will receive during retirement. Employer contributions plus earnings from investments made with those contributions pay the specified benefit. Common terminology refers to such plans as ____________.  The assets in the plan will usually not equal the liabilities of the plan, resulting in an overfunded or underfunded plan. 
A. defined benefit pension plans.
B. defined contribution pension plans.
C. accumulated benefit pension plans.
D. accumulated contribution pension plans.
E. unqualified pension plans.

52. Pension plans are usually organized as a  
A. trust.
B. corporation.
C. partnership.
D. limited liability company.
E. chartered company.

53. Which of the following is/are true concerning pension plans? 
A. The plan administrator serves in a fiduciary capacity for the benefit of employees.
B. The employer cannot access assets in the pension plan except under specific conditions that vary, as a matter of pension law, by jurisdiction.
C. The employer does not consolidate the assets and liabilities of the pension plan with its own assets and liabilities.
D. The total amount of cash that the employer contributes to the pension plan over time is the total amount of pension expense that the employer must recognize in measuring net income.
E. all of the above

54. The computation of the pension liability for a defined benefit plan uses actuarial estimates or actuarial assumptions of 
A. actual interest rates.
B. estimated employee mortality, only.
C. actual employee turnover, only.
D. estimated employee turnover, mortality, and interest rates.
E. actual employee turnover, mortality, and interest rates.

55. The liability of the pension plan equals the  
A. future value of the expected amounts payable to employees.
B. present value of the expected amounts payable to employees.
C. expected future amounts payable to employees.
D. current amounts payable to employees during the next year or operating cycle.
E. employees’ current benefits.

56. The discount rate that firms use in measuring the pension plan liability is the rate of return on  
A. high-quality equity investments.
B. low-quality fixed-income investments with a maturity approximately equal to the period to maturity of the pension benefits.
C. average-quality fixed-income investments with a maturity approximately equal to the period to maturity of the pension benefits.
D. high-quality fixed-income investments with a maturity approximately equal to the period to maturity of the pension benefits.
E. certificates of deposit with a maturity approximately equal to the period to maturity of the pension benefits.

57. The typical benefit formula for a defined benefit plan takes into account the employee’s  
A. length of service, only.
B. salary, only.
C. length of service and salary.
D. marital status, only.
E. length of service, salary, and marital status.

58. U.S. GAAP defines the primary measurement of the pension liability of the pension plan as the _____the _____ of the amount the pension plan expects to pay to employees during retirement based on accumulated service but using the level of salary expected to serve as a basis for computing pension benefits.  
A. projected benefit obligation; future value
B. projected benefit obligation; present value
C. actual benefit obligation; present value
D. actual benefit obligation; future value
E. actual benefit obligation; expected value

59. U.S. GAAP treatment of a defined benefit pension plan requires employers to recognize the funded status as _____, if the pension plan(s) is/are overfunded and  _____, if the pension plan(s) is/are underfunded, and an adjustment to Other Comprehensive Income, a shareholders’ equity account that is _____, for the offsetting amount.  
A. an asset; a liability; not part of net income
B. an asset; a liability; part of net income
C. a liability; an asset; not part of net income
D. a liability; an asset; part of net income
E. none of the above

60. U.S. GAAP treatment of a defined benefit pension plan requires employers to recognize the funded status as 
A. an asset, if the pension plan(s) is/are overfunded.
B. a liability, if the pension plan(s) is/are underfunded.
C. both an asset [for the net overfunded plan(s)] and a liability [for the net underfunded plan(s)].
D. an adjustment to Other Comprehensive Income, a shareholders’ equity account that is not part of net income, for the offsetting amount.
E. all of the above