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Intermediate Accounting > Test for 20 and 21 > Flashcards

Flashcards in Test for 20 and 21 Deck (16)
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1
Q

In a defined-benefit plan, the process of funding refers to

A

making the periodic contributions to a funding agency to ensure that funds are available to meet retiree’ claims

2
Q

In a defined-contribution plan, a formula is used that

A

requires an employer to contribute a certain sum each period based on the formula

3
Q

The relationship between the amount funded and the amount reported for pension expense is as follows

A

pension expense may be greater than, equal to, or less than the amount funded

4
Q

In computing the service cost component of pension expense, the FASB concluded that

A

the projected benefit obligation using future compensation levels provides a realistic measure of present pension obligation

5
Q

In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as

A

pension asset/liability

6
Q

When a company amends a pension plan, for accounting purposes, prior service costs should be

A

recorded in other comprehensive (PSC)

7
Q

Gains and losses that relate to the computation of pension expense should be

A

recorded currently and in the future by applying the corridor method which provides the amount to be amortized.

8
Q

Interest cost included in pension expense recognized for a period by an employer sponsoring a defined-benefit plan represents the

A

increase in the projected benefit obligation due to the passage of time

9
Q

Which of the following best describes the new rules in accounting for leases

A

All leases longer than 1 year are capitalized

10
Q

While some leases are accounted for as a sale or purchase, there is theoretic justification for considering all leases to be sales or purchases. The principal reason that supports this idea is that

A

a lease reflects the purchase or sale of a quantifiable right to use of property

11
Q

What impact does a bargain purchase option have on the present ale of the lease payments computed by the leassee

A

the present value of the lease payments would be increased by the present value of the option price if, at the inception of the lease agreement, it appeared reasonably certain that the lessee would exercise the option at the end of the lease and purchase the asset at the option price

12
Q

the methods of accounting for a lease by the lessee are

A

operating and financing lease methods

13
Q

Which of the following is a correct statement of one of the criteria to determine if a lease is a finance lease

A

the lease term is equal to a major part of the estimated economic life of the leased property

14
Q

A lessee with a finance lease containing a bargain purchase option should amortize the right of use asset over the

A

asset’s remaining economic life

15
Q

The primary difference between a direct-financing lease and a sales-type lease is the

A

recognition of the manufacturer’s or dealer’s profit (or loss) at the inception of the lease

16
Q

In a lease that is appropriately recorded as direct-financing lease by the lessor, the income

A

should be amortized over the period of the lease using the effective interest method