Reading 39: Non-current (Long-term) Liabilities-LOS j 习题精选 2011, style, center, benefit, investment

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Session 9: Financial Reporting and Analysis: Inventories, Long-lived Assets, Income Taxes, and Non-current Liabilities
Reading 39: Non-current (Long-term) Liabilities

LOS j: Describe defined contribution and defined benefit pension plans.

 

 

In a defined contribution pension plan, investment risk is borne by the:

A) employee.

B) employer.

C) plan manager.

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In a defined contribution plan, the employee makes the investment decisions and assumes the investment risk.

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The defined benefit obligation is best described as:

A) present value of future pension benefits earned to date.

B) projected value of pension benefits owed to plan participants.

C) stated periodic payment owed to a plan participant upon retirement.

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The defined benefit obligation is the present value of the future benefits earned to date by participants in a defined benefit pension plan.

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In a defined benefit pension plan:

A) the employee is responsible for making investment decisions.

B) the employee is promised a periodic payment upon retirement.

C) the employer’s pension expense is equal to its contributions to the plan.

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In a defined benefit pension plan, a periodic payment, typically based on the employee’s salary, is promised to the employee upon retirement and the employer contributes to an investment trust that generates the principal growth and income to meet the pension obligation. The employees do not direct the investments in their accounts as they do in a defined contribution plan. Pension expense for a defined benefit plan has several components, including service cost, prior service cost, and interest cost, and depends on actuarial assumptions and the expected rate of return on plan assets.

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The present value of benefits earned during the current period by participants in a defined benefit pension plan is best described as the plan’s:

A) prior service cost.

B) defined benefit obligation.

C) service cost.

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Service cost refers to the benefits earned in the current period by a defined benefit plan’s participants. Prior service costs are benefits awarded retroactively when a plan is initiated or changed. Defined benefit obligation is the present value of future benefits earned to date.