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Question: The factors affecting pension expense are not always obvious. As the accountant for Sunlight City, you determine the following with respect to the city's pensions in PROBLEMS a particular year.

Service cost 356,000

Interest on total pension liability 400,000

Actual earnings on pension plan investments 500,000

Projected earnings on pension plan investments 450,000

Employer contribution to the plan 180,000

Benefits paid to retirees 211,000

1. Based on the information provided, what should the city report as its pension expense for the year?

2. Suppose that the benefits paid to retirees was actually $251,000 rather than $211,000. How would that affect the pension expense? Explain.

3. Suppose also that the city failed to contribute anything to the pension plan.

a. Howwouldthataffectthepensionexpensetobereportedonthegovernment-widestatements? Explain.

b. How would it affect the pension expenditure to be reported on the statements of the general fund?

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Accounting Basics, Accounting

Category:- Accounting Basics
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