Real World Case 175 Types of pension plans; disclosures

LO171

Real World Financials

Refer to the financial statements and related disclosure notes of Microsoft Corporation (www.microsoft.com).

Required:

What type of pension plan does Microsoft sponsor for its employees? Explain.

Who bears the risk of factors that might reduce retirement benefits in this type of plan? Explain.

Assuming that employee and employer contributions vest immediately, suppose a Microsoft employee contributes $1,000 to the pension plan during her first year of employment and directs investments to a bond mutual fund. If she leaves Microsoft early in her second year, after the mutual funds value has increased by 2%, how much will she be entitled to roll over into an Individual Retirement Account (IRA)?

How did Microsoft account for its participation in the pension plan in fiscal 2017?