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IIA CIA Exam
Certified Internal Auditor Exam (Page 53 )

Updated On: 12-Jan-2026
Page 53 of 342
PDF with 1702 Questions

The following information relates to the activity of the defined postemployment benefit plan of Twain Publishers, Ltd.:

Twain's expense recognized in the income statement is

  1. US $120, 000
  2. US $135, 000
  3. US $140, 000
  4. US $145, 000

Answer(s): D

Explanation:

Components of the expense are current service cost, interest cost, the expected return on plan assets, service costrecognition in full of vested amounts and amortization of nonvested amounts), and amortization of actuarial loss. Current service cost. interest cost. the amortization of actuarial loss, and the past service cost increase the expense The expected return on plan assets decreases the expense.



An employer sponsors a defined postemployment benefit plan. If the given amount of the present value el the defined benefit obligation exceeds the given amount of the fair value of plan assets, the defined benefit liability to be recognized in the balance sheet is greatest when the employer has

  1. Net unrecognized actuarial gains and no past service cost.
  2. Net unrecognized actuarial losses and no past service cost.
  3. Net unrecognized actuarial losses and unrecognized past service cost
  4. No unrecognized actuarial gains or losses and unrecognized past service cost.

Answer(s): A

Explanation:

The amount of the defined benefit liability recognized equals the present value of the defined benefit obligationDBO) at the balance sheet date, plusminus) unrecognized actuarial gainslosses). minus unrecognized past service cost, minus the fair value of plan assets at the balance sheet date. If this amount is nr Dative, it represents an asset However, the maximum that may be recognized for such an asset is the sum of
unrecognized actuarial losses, unrecognized past service cost. and the present value ref future refunds from the plan or reductions in future contributions. Moreover, the application of this section should not result in a gain being recognized solely because of an actuarial loss or past service cost in the current period or in a loss being recognized solely because of an actuarial gain in the current period. Thus, if the excess of the DBO over the fair value of plan assets is constant, net unrecognized actuarial gains will increase the liability. Net unrecognized actuarial losses and unrecognized past service cost decrease the liability.



An employee's right to obtain postemployment benefits regardless of whethers)he remains employed is known as his/her.

  1. Service cost.
  2. Defined benefit plan.
  3. Vested benefits.
  4. Additional minimum liability.

Answer(s): C

Explanation:

Vested benefits are those earned postemployment benefits owed to any employee that are not contingent upon the employee's continued service. Whether benefits have vested affects the measurement of the employer's defined benefit obligation but not its existence. Moreover, vesting affects the accounting for past service cost. Past service cost is amortized as an expense ever the average perm I until the benefits are vested.



The defined post employment benefit obligation of an entity includes benefit obligations to <List A> employees at <List B> salary levels. List A List B

  1. Option A
  2. Option B
  3. Option C
  4. Option D

Answer(s): D

Explanation:

The measurement of a postemployment benefit obligation includes estimates of future salary increases, the benefits defined in the plan, the benefits arising from any constructive obligation beyond the terms of the plan, and estimates of future changes in state benefits that affect the level of plan benefits. The possibility that nonvested projected benefits will not vest is a factor in the measurement of the defined benefit obligation, but it does not aft -I file existence of the obligation.



Which of the following statements is true for a defined contribution post employment benefit plan?

  1. The employer is required to contribute a certain amount each period based on the plan's formula.
  2. The employer bears the risk of the plan's investment performance.
  3. Post employment benefits received by employees are defined by the plan's formula
  4. The employer and employees are required to contribute equal amounts to the fund.

Answer(s): A

Explanation:

A defined contribution plan provides benefits in exchange for services, provides an account for each participant, and specifies how contributions are to be determined. Post employment benefits depend only on contributions, returns on investment, and allocated forfeitures of other participants' benefits. Thus, employees have the benefit of gain and the risk of loss.



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