Recorded pension expenditures are not always influenced by actuarial computations. Hayward City maintains a defined benefit pension plan for its employees. In a recent year, the city contributed $5 million to its pension fund. However, its annual pension cost as calculated by its actuary was $7 million. The city accounts for the pension contributions in a governmental fund. Record the pension expenditure in the appropriate fund. Suppose in the following year the city contributed $6 million to its pension fund, but its annual pension cost per its actuary was only $5 million. Prepare the appropriate journal entries. Briefly justify why you did, or did not, take into account the pension cost as calculated by the actuary.
Recorded pension expenditures are not always influenced by actuarial computations. Hayward City maintains a defined benefit pension plan for its employees. In a recent year, the city contributed $5 million to its pension fund. However, its annual pension cost as calculated by its actuary was $7 million. The city accounts for the pension contributions in a governmental fund. Record the pension expenditure in the appropriate fund. Suppose in the following year the city contributed $6 million to its pension fund, but its annual pension cost per its actuary was only $5 million. Prepare the appropriate journal entries. Briefly justify why you did, or did not, take into account the pension cost as calculated by the actuary.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Recorded pension expenditures are not always influenced by actuarial computations.
Hayward City maintains a defined benefit pension plan for its employees. In a recent year, the city contributed $5 million to its pension fund. However, its annual pension cost as calculated by its actuary was $7 million. The city accounts for the pension contributions in a governmental fund.
- Record the pension expenditure in the appropriate fund.
- Suppose in the following year the city contributed $6 million to its pension fund, but its annual pension cost per its actuary was only $5 million. Prepare the appropriate
journal entries. - Briefly justify why you did, or did not, take into account the pension cost as calculated by the actuary.
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