Asked by Miranda Wilkerson on May 03, 2024
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The payments made by the employer to fund a defined contribution pension plan create a pension fund asset on the balance sheet of the employer.
Pension Fund Asset
Financial resources that a pension fund holds to meet future obligations to participants, including equities, bonds, real estate, and other investments.
Defined Contribution Pension Plan
A retirement plan where employers, employees, or both make contributions on a regular basis, but the benefits received depend on the plan's investment performance.
Balance Sheet
A financial statement that provides a snapshot of a company's financial position, including assets, liabilities, and shareholders' equity at a specific point in time.
- Differentiate the characteristics of defined benefit pension plans from those of defined contribution schemes.
- Comprehend how pension funding affects an employer's balance sheet and pension expense.
Verified Answer
Learning Objectives
- Differentiate the characteristics of defined benefit pension plans from those of defined contribution schemes.
- Comprehend how pension funding affects an employer's balance sheet and pension expense.
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