Accounting For Governmental & Nonprofit Entities
18th Edition
ISBN: 9781259917059
Author: RECK, Jacqueline L., Lowensohn, Suzanne L., NEELY, Daniel G.
Publisher: Mcgraw-hill Education,
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Question
Chapter 8, Problem 17.11EP
To determine
Identify the pension plan suitable to the given situation.
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Students have asked these similar questions
A defined benefit plan is one in which:
A.) The employer promises specified payments to employees on their retirement.
B.)The specific provisions are defined by the Internal Revenue Code.
C.) The specific provisions are defined by the Uniform Code of Retirement Plans.
D.) The employee can specify the mix of benefits (e.g., health, pension, insurance) that will be received on retirement.
Carson Company sponsors a single-employer defined benefit pension plan. The plan provides that pension benefits are determined by age, years of service, and compensation. Among the components that should be included in the calculation net pension cost are service cost, interest cost, and actual return on plan assets.
Required:
A. What two accounting problems result from the nature of the defined benefit pension plan? Why do those problems arise?
B. How should Carson determine service cost component of the net pension cost?
C. How should Carson determine the interest cost component of the net pension cost?
D. How should Carson determine the actual return on plan assets component of the net pension cost?
Carson Company sponsors a single-employer defined benefit pension plan. The plan provides that pension benefits are determined by age, years of service, and compensation. Among the components that should be included in the calculation, net pension cost is service cost, the interest cost, and actual return on plan assets.
What two accounting problems result from the nature of the defined benefit pension plan?
Why do these problems arise?
Chapter 8 Solutions
Accounting For Governmental & Nonprofit Entities
Ch. 8 - What are the criteria for determining if a...Ch. 8 - Prob. 2QCh. 8 - Identify the different types of trust funds and...Ch. 8 - Describe the basic activities conducted by a tax...Ch. 8 - Explain how the financial reporting of fiduciary...Ch. 8 - Prob. 6QCh. 8 - How are external investment pool activities...Ch. 8 - What is a private-purpose trust fund? There are...Ch. 8 - Prob. 9QCh. 8 - Prob. 10Q
Ch. 8 - What is OPEB and how is OPEB reported by...Ch. 8 - Prob. 12CCh. 8 - Prob. 13CCh. 8 - Prob. 14CCh. 8 - Prob. 15CCh. 8 - Prob. 17.1EPCh. 8 - Which of the following is not a fiduciary fund? a....Ch. 8 - Prob. 17.3EPCh. 8 - Fiduciary fund activities are not included in the...Ch. 8 - Prob. 17.5EPCh. 8 - Prob. 17.6EPCh. 8 - The city has installed sidewalks using special...Ch. 8 - Prob. 17.8EPCh. 8 - Fiduciary funds a. Are accounted for using the...Ch. 8 - Prob. 17.10EPCh. 8 - Prob. 17.11EPCh. 8 - An investment trust fund would report in the...Ch. 8 - Prob. 17.13EPCh. 8 - Which pension fund financial statement or schedule...Ch. 8 - Prob. 17.15EPCh. 8 - Prob. 18.1EPCh. 8 - Prob. 18.2EPCh. 8 - The county collects taxes on behalf of the county,...Ch. 8 - Prob. 18.4EPCh. 8 - Prob. 18.5EPCh. 8 - At the date of the creation of the investment...Ch. 8 - The city council of the City of Great Falls...Ch. 8 - The city council of the City of Great Falls...Ch. 8 - Prob. 18.9EPCh. 8 - Prob. 18.10EPCh. 8 - Tax Custodial Fund. (LO8-2) The county collector...Ch. 8 - Special Assessment Debt. (LO8-2) Residents of...Ch. 8 - Identification of Fiduciary Funds. (LO8-2, LO8-3,...Ch. 8 - Investment Trust Fund. (LO8-3) The Albertville...Ch. 8 - Pass-through Custodial Funds. (LO8-2) Evergreen...Ch. 8 - Fiduciary Financial Statements. (LO8-4) Ray County...Ch. 8 - Fiduciary Fund Financial Statements. (LO8-4)...Ch. 8 - Prob. 26EPCh. 8 - Prob. 27EP
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Similar questions
- The two main types of pension plans are defined benefit plans and defined contribution plans. Explain the difference between the two. How does the accounting for each differ? With defined benefit plans, there are several levels of benefit obligations for the company. List these and describe what each represents. Which does GAAP require with recognition and why?arrow_forwardDistinguish between defined contribution and defined benefit pension plans. Justify the employer's responsibilities under the two kinds of plans.arrow_forwardIt refers to a plan where only the employer contributes to a retirement fund. a. Contributory plan b. Non-contributory plan c. Unfunded plan d. Libreko planarrow_forward
- In a defined-benefit plan, a formula is used that Select one: a. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee. b. requires that pension expense and the cash funding amount be the same. c. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. d. defines the benefits that the employee will receive at the time of retirement.arrow_forwardA company shows in its balance sheet, a provision for pension costs, Select one: a. This company has a defined benefit plan b. This company has a funded defined contribution plan c. This company has a defined contribution plan d. This company has a funded defined benefit planarrow_forwardIf a pension plan is both contributory and qualified, it is fully funded by the employer and not governed by IRC. fully funded by the employee and governed by IRC. funded by both employer and employee and notgoverned by IRC. funded by both employer and employee and governed by IRC.arrow_forward
- The two main types of pension plans are defined benefit plans and defined contribution plans. Explain the difference between the two. How does the accounting for each differ?arrow_forwardWhich of the following factors is least likely to affect the amount of retirement benefits under a defined benefit plan? * A. The employee's length of service B. The level of the employee's compensation C. The age of the retiring employee D. The amount of employer contributions to a fund.arrow_forwardExplain the fundamental differences between a defined contribution pension plan and a defined benefit pension plan.arrow_forward
- A company currently offers it’s employees a defined benefit pension plan, but is looking into changing to a defined contribution plan for new employees, the company reports under IFRS. Within the notes, there is reference to the following: in relation to the pension extract (a)• Net pension liabilities/asset • Employee service cost • Net interest expense/income• Remeasurements Explain what the main features are of a defined benefit and defined contribution pension plan and how they are included in the financial statements. With reference to the pension notes, describe each item and how any movement in those items would be recorded in the financial statements.arrow_forwardDifferentiate between employer-sponsored pension plans and self-directed retirement plans.arrow_forward
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