Reference no: EM132976027
Questions -
Q1. Robert Co. purchases land and constructs a service station and e wash for a total of $520,000. At January 2, 2020, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $610,000 and immediately leased from the oil company by Robert. Fair value of the land at time of the sale was $60,000. The lease is a 10-year, noncancelable lease. Robert uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Robert at the end of the lease term. The gain from the sale-leaseback recognized by the seller-lessee for 2020 should be
a. $90,000
b. $9,000
c. $6,000
d. S-0-
Q2. The Lotus Company offers employees a defined contribution pension plan. In 2020, Lotus contributed $780,000 as required according to the plan. The pension plan paid $685,000 to retired employees in 2020. Which of the following statements is true?
a. Lotus will record and report pension expense of $685,000.
b. Lotus will record an accrued liability of $95,000.
c. Lotus will record and report pension expense of $780,000.
d. Lotus will recognize prior service cost of $95,000
Q3. The following information for Muddy Enterprises is given below:
December 31, 2021
Assets and obligations
Plan assets (at fair value) $600,000
Accumulated benefit obligation 1,110,000
Projected benefit obligation 1,200,000
Other Items
Pension asset / liability, January 1, 2021 30,000
Contributions 360,000
Other comprehensive loss in 2021 503,700
There were no actuarial gains or losses at January 1, 2021. The average remaining service life of employees is 10 years.
The amortization of Other Comprehensive Loss for 2022 is
a. $50,370
b. $0.
c. $69,000.
d. $38,370
Q4. Presented below is information related to Young Inc. pension plan for 2021.
Service cost $1,360,000
Actual return on plan assets 280,000
Interest on projected benefit obligation 520,000
Amortization of net loss 120,000
Amortization of prior service cost due to increase in benefits 220.000
Expected return on plan assets 240,000
What amount should be reported for pension expense in 2021?
a. $1,700,000
b. $1,940,000
c. $1,980,000
d. $2,180,000