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Flashcards in Deck 8 Deck (20):
1

FV of bond has two elements:

PV of future interest payments (market rate) + PV of principal (market rate)

2

Journal entry for issuing bond at discount

DR. cash (discount amount) and discount on BP; CR. Bonds payable (face)

3

Accrued interest for bonds payable =

Face amount x coupon rate x amount of months that have gone by with no interest paid

4

Issued bond on April 1 that were dated January 1; amount of accrued interest is

For 3 months

5

How does the interest rate on convertible debt compare to the interest rate on nonconvertible debt?

The interest rate for convertible debt is lower

6

A stock dividend reclassifies amounts from

Retained earnings to Common stock and APIC

7

Net pension gain or loss =

Actual return on plan asset - expected return on plan assets

8

Ending fair value of plan asset =

Beg FV + contributions - benefits paid + actual return on plan assets

9

Pension plan investment assets must be reported at

Fair value

10

The amount of OCI for pension plans must be shown

Net of tax

11

Overfunded plan

FV of plan assets is greater than PBO; record as noncurrent asset

12

Difference between ABO and PBO

PBO uses an assumption for future salary while ABO uses current salary

13

Ending PBO =

Beg PBO + service cost and interest cost + prior service cost + losses - gains - benefits paid

14

Net period pension cost =

SIR AGE...Service cost + interest cost - expected return on plan assets + amortization of prior service cost - amort gain + amort loss + amort of existing asset

15

Interest cost for pension plans =

Beg PBO x discount rate

16

Expected return on plan assets =

Beg FV x expected rate of return on plan assets

17

Amortization of unrecognized prior service cost =

Beg prior service cost/average remaining service life

18

Corridor approach related to gains/losses for pensions

Unrecognized gain or loss - (greater of 10% of Beg. PBO or FV)

19

Journal entry to record prior service cost and pension losses

Dr. OCI and CR. Pension benefit asset/liability

20

Journal entry to record amortization of Prior service cost and losses

Dr. Net periodic pension cost and Cr. OCI