The fair value of pension plan assets is used to determine the corridor and to calculate the expected return on plan assets.
Expected Return
Corridor on Plan Assets
a. Yes Yes
b. Yes No
c. No Yes
d. No No
Answer: Yes Yes
Which of the following is true of pension termination?
a. Companies can terminate a pension plan whenever they wish to do so.
b. Terminating a pension plan is illegal in U.S.
c. A company must start a new defined benefit plan after it eliminates the old one.
d. FASB requires recognition in earnings of a gain or loss when a pension obligation is settled.
Answer: FASB requires recognition in earnings of a gain or loss when a pension obligation is settled
A pension fund gain or loss that is caused by a plant closing should be
a. recognized immediately as a gain or loss on the plant closing.
b. spread over the current year and future years.
c. charged or credited to the current pension expense.
d. recognized as a prior period adjustment.
Answer: recognized immediately as a gain or loss on the plant closing
