Select the best answer for each of the following and write the letter corresponding to your answer in the answer sheet provided.

1. With respect to FASB's corridor approach, which of the following statements is correct?

a. The corridor amount is the difference between the accumulated benefit obligation and the fair value of plan asset.

b. Companies amortize net gain or loss only if, at the beginning of the year,the net gain or loss in Accumulated OCI exceeds the projected benefit obligation amount.

c. Companies amortize net gain or loss only if, at the end of the year, the net gain or loss in Accumulated OCI exceeds the corridor amount.

d. Companies amortize net gain or loss only if, at the beginning of the year, the net gain or loss in Accumulated OCI exceeds the corridor amount.

2. A company that has a defined benefit pension plan would record a pension asset on the balance sheet as of the end of the year

a. If the fair value of the plan assets exceeds projected benefit obligation amount.

b. If the accumulated benefit obligation amount exceeds the fair value of the plan assets.

c. If the defined benefit plan is underfunded.

d. If the fair value of plan assets exceeds vested benefit obligation amount.

3. With respect to gains and losses on plan assets and the calculations involved in determining the pension expense, which of the following statements is correct?

a. Unexpected gain occurs when expected return is greater than actual return.

b. Unexpected gain netted against actual return results in expected return on plan assets.

c. Expected return on plan assets is always higher than actual return.

d. Unexpected loss occurs when actual return is greater than expected return.

4. Which of the following will not result in future deductible amounts?

a. Subscriptions received in advance recognized in financial income

b. Advance rental receipts recognized in financial income

c. Excess depreciation taken on tax return compared to the amount recognized in financial income

d. Litigation accruals recognized in financial income

5. Which of the following will not result in a temporary difference?

a. Subscriptions received in advance recognized in financial income

b. Advance rental receipts recognized in financial income

c. Fines resulting from violation of law recognized in financial income

d. Litigation accruals recognized in financial income

6. Which of the following statements is correct?

a. Subscriptions received in advance would result in future tax able amounts and a deferred tax liability

b. Advance rental receipts would result in future taxable amounts and a deferred tax liability

c. Excess depreciation taken on tax return compared to the amount recognized in financial income would result in future deductible amounts and a deferred tax asset

d. Litigation accruals recognized in financial income would result in future deductible amounts and a deferred tax asset

7. In computing the interest expense component of pension expense, the settlement rate is applied to

a. the beginning of the year balance of the accumulated benefit obligation.

b. the end of the year balance of the accumulated benefit obligation.

c. the end of the year balance of the projected benefit obligation.

d. the beginning of the year balance of the projected benefit obligation.

8. Which of the following statements is correct?

a. Amortization of prior service costs increases pension expense and reduces the balance of accumulated OCI prior service costs.

b. Amortization of prior service costs reduces pension expense and increases the balance of accumulated OCI prior service costs..

c. Amortization of loss reduces pension expense and increases the balance of accumulated OCI gains/losses.

d. Amortization of loss reduces pension expense and reduces the balance of accumulated OCI gains/losses.