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Differentiate between “accounting for the employer” and “accounting for the pension fund.”

Short Answer

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Accounting is a term where the finance or the accounting department of an organization records the financial transactions using financial statements to identify its financial position and cash management.

Step by step solution

01

Introduction

The accounting for employer and pension funds differs in various cases. They both are related to the pension contribution made by the firm.

02

Difference between accounting for the employer and accounting for pension fund

Accounting for employer

Accounting for pension fund

It is a term used when an employer is responsible for the contribution and sponsorship of an employee's pension plan.

It is a term used when the organization receives the contribution from both employer and the employee towards a specific pension plan that will benefit the employee.

It involves allocating, measuring, and disclosing the plan’s financial information in its financial statements.

It involves the identification of the contribution plans that the employer has sponsored.

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Most popular questions from this chapter

The following items appear on Brueggen Company’s financial statements. 1. Under the caption Assets: Pension asset/liability. 2. Under the caption Liabilities: Pension asset/liability. 3. Under the caption Stockholders’ Equity: Prior service cost as a component of Accumulated Other Comprehensive Income. 4. On the income statement: Pension expense. Instructions Explain the significance of each of the items above on corporate financial statements. (Note: All items set forth above are not necessarily to be found on the statements of a single company.)

Veldre Company provides the following information about its defined benefit pension plan for the year 2017. Service cost $ 90,000 Contribution to the plan 105,000 Prior service cost amortization 10,000 Actual and expected return on plan assets 64,000 Benefits paid 40,000 Plan assets at January 1, 2017 640,000 Projected benefi t obligation at January 1, 2017 700,000 Accumulated OCI (PSC) at January 1, 2017 150,000 Interest/discount (settlement) rate 10% Instructions Compute the pension expense for the year 2017.

Determine the meaning of the following terms. (a) Contributory plan. (b) Vested benefits. (c) Retroactive benefits. (d) Years-of-service method.

At the end of the current year, Pociek Co. has prior service cost of $9,150,000. Where should the prior service cost be reported on the balance sheet?

For 2017, Carson Majors Inc. had pension expense of \(77 million and contributed \)55 million to the pension fund. Which of the following is the journal entry that Carson Majors would make to record pension expense and funding? (a) Pension Expense 77,000,000 Pension Asset/Liability 22,000,000 Cash 55,000,000 (b) Pension Expense 77,000,000 Pension Asset/Liability 22,000,000 Cash 99,000,000 (c) Pension Expense 55,000,000 Pension Asset/Liability 22,000,000 Cash 77,000,000 (d) Pension Expense 22,000,000 Pension Asset/Liability 55,000,000 Cash 77,000,000

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