ExpertHard1 markMultiple Choice
CPA · Question 42 · Area II: Technical Accounting
A defined benefit pension plan reports the following:<br/>- Investments at Fair Value: $5,000,000<br/>- Contributions Receivable: $200,000<br/>- Benefits Payable: $150,000<br/>- Accumulated Plan Benefits (Actuarial PV): $6,000,000<br/><br/>What is the amount of Net Assets Available for Benefits?
A defined benefit pension plan reports the following:<br/>- Investments at Fair Value: $5,000,000<br/>- Contributions Receivable: $200,000<br/>- Benefits Payable: $150,000<br/>- Accumulated Plan Benefits (Actuarial PV): $6,000,000<br/><br/>What is the amount of Net Assets Available for Benefits?
Answer options:
A.
$5,200,000
B.
$5,050,000
C.
($950,000)
D.
$5,000,000
How to approach this question
Statement of Net Assets = Assets - Liabilities. Do NOT subtract the Actuarial Present Value of Accumulated Plan Benefits (that goes in a separate schedule or note).
Full Answer
B.$5,050,000✓ Correct
Net Assets = Investments ($5M) + Receivables ($0.2M) - Benefits Payable ($0.15M) = $5.05M. The actuarial obligation is not a liability on this specific statement.
Common mistakes
Subtracting the accumulated plan benefits.
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