The following questions dealing with pensions

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The following questions dealing with pensions and other postretirement benefits are adapted from questions that previously appeared on Certified Management Accountant (CMA) examinations. The CMA designation sponsored by the Institute of Management Accountants (www.imanet.org) provides members with an objective measure of knowledge and competence in the field of management accounting. Determine the response that best completes the statements or questions.

1. The projected benefit obligation (PBO) is best described as the

a. Present value of benefits accrued to date based on future salary levels.
b. Present value of benefits accrued to date based on current salary levels.
c. Increase in retroactive benefits at the date of the amendment of the plan.
d. Amount of the adjustment necessary to reflect the difference between actual and estimated actuarial returns.

2. On November 30, the Board of Directors of Baldwin Corporation amended its pension plan giving retroactive benefits to its employees. The information below is provided at November 30.
Using the straight-line method of amortization, the amount of prior service cost charged to expense during the year ended November 30 is

a. $9,500
b. $19,000
c. $30,250
d. $190,000 

Reference no: EM131002782

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