Which of the following components, that are paid during the current year, must be included in the calculation of pension expense recognized for a period by an employer sponsoring a defined benefit pension plan?

Employer contributions

Benefits to retired employees

Question

Business

Coby Chaney

15 December, 04:05

Which of the following components, that are paid during the current year, must be included in the calculation of pension expense recognized for a period by an employer sponsoring a defined benefit pension plan?

Employer contributions

Benefits to retired employees

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Answers (1)

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Kenyon Camacho · Answer 1

None of the components are paid during the present year, included in computing the pension expense.

Explanation:

Mostly, the contributions made by the employer sponsoring a plan which is a defined benefit pension plan are cash contributions, which reduces or decrease the cash and increase the plan assets, with having no impact on the evaluation of the pension expense of the employee.

Benefits to the retired employees reduce or decrease the PBO (stands for Projected benefit obligation) and plan assets, both of which are the accounts of the plan and neither of which affect the employer accounts.

Therefore, both the components will not affect the pension expense of the employee.

Which of the following components, that are paid during the current year, must be included in the calculation of pension expense recognized for a period by an employer sponsoring a defined benefit pension plan?Employer contributionsBenefits to retired employees

Which of the following components, that are paid during the current year, must be included in the calculation of pension expense recognized for a period by an employer sponsoring a defined benefit pension plan?

Employer contributions

Benefits to retired employees