In accounting for a pension plan, any difference between the pension cost charged to expense and the payments into the fund should be reported as
a. an offset to the liability for prior service cost.
b. pension asset/liability.
c. as other comprehensive income (G/L)
d. as accumulated other comprehensive income (PSC).
Answer: pension asset/liability
One component of pension expense is actual return on plan assets. Plan assets include
a. assets that a company holds to earn a reasonable return, generally at minimum risk.
b. plan assets still under the control of the company.
c. only assets reported on the balance sheet of the employer as prepaid pension cost.
d. None of these answers are correct.
Answer: assets that a company holds to earn a reasonable return, generally at minimum risk
The actual return on plan assets
a. is equal to the change in the fair value of the plan assets during the year.
b. includes interest, dividends, and changes in the fair value of the fund assets.
c. is equal to the expected rate of return times the fair value of the plan assets at the beginning of the period.
d. All of these answers are correct.
Answer: includes interest, dividends, and changes in the fair value of the fund assets
