CPA PROBLEMS ACCT 460
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This 2 page Class Notes was uploaded by Tabitha Mertz DVM on Wednesday September 30, 2015. The Class Notes belongs to ACCT 460 at Western Kentucky University taught by Jack Hall in Fall. Since its upload, it has received 8 views. For similar materials see /class/216732/acct-460-western-kentucky-university in Accounting at Western Kentucky University.
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Date Created: 09/30/15
Instructor Dr Hall Accounting 460 Estimated time CPA Problems 4050 minutes Handout Problem No F280 This problem consists of two unrelated parts Instructions Number 4a Question Number 4a consists of 10 items Select the best answerfor each item Use a No 2 pencil to blacken the appropriate ovals on the Objective Answer Sheet to indicate your answers Answer all items Your grade will be based on the total number of correct answers The following information pertains to Sparta Co s defined benefit pension plan Discount rate 8 Expected rate of return 10 Average service life 12 years At January 1 1992 Projected benefit obligation 600000 Fair value of pension plan assets 720000 Unrecognized prior service cost 240000 Unamortized prior pension gain 96000 At December 31 1992 Projected benefit of obligation 910000 Fair value of pension plant assets 825000 Service costs for 1992 was 90000 There were no contributions made or benefits paid during the year Sparta s unfunded accrued pension liability was 8000 at January 1 1992 Sparta uses the straightline method of amortization over the maximum period permitted Required 1 For items 1 through 5 calculate the amounts to be recognized as components of Sparta s unfunded accrued pension liability at December 31 1992 To record your entry write the number in the boxes on the Objective Answer Sheet and blacken the corresponding oval below each box These items cannot be graded if you fail to blacken the ovals Amounts to be calculated 1 Interest cost 2 Expected return on plan assets 3 Actual return on plan assets 4 Amortization of prior service costs 5 Minimum amortization of unrecognized pension gain 2 For items 6 through 10 determine whether the component increases I or decreases D Sparta s unfunded accrued pension liability and blacken the corresponding oval on the Objective Answer Sheet Items to be answered 6 Service cost 7 Deferral of gain on pension plan assets 8 Actual return on plan assets 9 Amortization of prior service cost 10 Amortization of unrecognized pension gain Handout Problem No F280 continued p 2 Number 4b On January 2 1992 Elsee Co leased equipment from Grant Inc Lease payments are 100000 payable annually every December 31 for twenty years Title to the equipment passes to Elsee at the end of the lease term The lease is noncancelable Additional facts 1 The equipment has a 750000 carrying amount on Grant s books lts estimated economic life was 25 years on January 2 1992 2 The rate implicit in the lease which is known to Elsee is 10 Elsee s incremental borrowing rate is 12 3 Elsee uses the straightline method of depreciation The rounded present value factors of an ordinary annuity for 20 years are as follows 12 75 10 85 Reguired Prepare the necessaryjournal entries without explanations to be recorded by Elsee for 1 entering into the lease on January 2 1992 2 making the lease payment on December 31 1992 3 expenses related to the lease for the year ended December 31 1992 Show supporting calculations for all entries
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