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Financial 6 Passmaster Questions

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Becker CPA Review, PassMaster Questions Lecture: Financial 6

CPA PassMaster Questions–Financial 6 Export Date: 10/30/08

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Becker CPA Review, PassMaster Questions Lecture: Financial 6

Pension Plans CPA-00679 Type1 M/C A-D Corr Ans: D PM#1 F 6-01

1. CPA-00679 FARE R02 #8 a. b. c. d.

Page 19

Which of the following disclosures is not required of companies with a defined-benefit pension plan? A description of the plan. The amount of pension expense by component. The weighted average discount rate. The estimates of future contributions.

CPA-00679 Explanation Choice "d" is correct. Although pension accounting has extensive disclosures, projections of future contributions into a pension plan are not required. "a", "b", and "c" are required disclosures.


Type1 M/C


Corr Ans: C


F 6-01

2. CPA-00681 FARE R99 #13 Page 9 Jan Corp. amended its defined benefit pension plan, granting a total credit of $100,000 to four employees for services rendered prior to the plan's adoption. The employees, A, B, C, and D, are expected to retire from the company as follows: "A" will retire after three years. "B" and "C" will retire after five years. "D" will retire after seven years. What is the amount of prior service cost amortization in the first year? a. b. c. d. $0 $5,000 $20,000 $25,000

CPA-00681 Explanation Choice "c" is correct. Amortization of unrecognized prior service cost is calculated by assigning an equal amount of the cost to the future periods of service of each employee at the date of amendment to the plan. The average service life of the four employees is five years. $100,000 ÷ 5 years = $20,000 CPA-00699 Type1 M/C A-D Corr Ans: C PM#4 F 6-01

3. CPA-00699 Th Nov 93 #30 Page 8 Visor Co. maintains a defined benefit pension plan for its…...

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