12. If a pension plan amendment results in a $1,500,000 increase in the projecte
ID: 2442838 • Letter: 1
Question
12. If a pension plan amendment results in a $1,500,000 increase in the projected benefit obligation, the pension expense will:
a) be decreased by $1,500,000 over the remaining service period of the future beneficiaries.
b) be increased by $1,500,000 in the year of the amendment.
c) be increased by $1,500,000 over the remaining service period of the future beneficiaries.
d) not be affected.
18. A severely underfunded pension plan is one in which the:
a) accumulated benefit obligation (ABO) exceeds the present value of the plan assets.
b) present value of plan assets exceeds the accumulated benefit obligation.
c) present value of plan assets exceeds the projected benefit obligation (PBO).
d) projected benefit obligation exceeds the present value of plan assets.
19. The minimum pension liability that must be shown on the balance sheet of the plan sponsor is the:
a) accumulated benefit obligation.
b) excess of the accumulated benefit obligation over the plan assets at fair value.
c) excess of the projected benefit obligation over the plan assets at fair value.
d) projected benefit obligation.
Explanation / Answer
12. If a pension plan amendment results in a $1,500,000 increase in the projected benefit obligation, the pension expense will:c) be increased by $1,500,000 over the remaining service period of the future beneficiaries Reason : The service cost, interest expense which are caused by an increase in projected obligation will increase through out the plan. 18. A severely underfunded pension plan is one in which the:
a) accumulated benefit obligation (ABO) exceeds the present value of the plan assets.
19. The minimum pension liability that must be shown on the balance sheet of the plan sponsor is the:
a) accumulated benefit obligation
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