Hayward City maintains a defined benefit pension plan for its employees. In a recent year, the city
Question:
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.
1. Record the pension expenditure in the appropriate fund.
2. 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.
3. Briefly justify why you did, or did not, take into account the pension cost as calculated by the actuary.
Step by Step Answer:
Government And Not For Profit Accounting Concepts And Practices
ISBN: 9781119803898
9th Edition
Authors: Michael H. Granof, Saleha B. Khumawala, Thad D. Calabrese