Question
Asked Jan 25, 2020
1 views

Name three approaches to measuring benefit obligations from a pension plan and explain how they differ.

check_circle

Expert Answer

Step 1

Pension: A fixed sum of money receivable in future or after the age of retirement, which the employer has invested during the period of employment for an employee is termed as a pension. This pension is mostly offered to government, public sector and some private sector employees.

Step 2

Three approaches to measuring benefit obligations from a pension plan are as follows:

Vested benefit obligation: Contribution towards the pension fund is decided based on the salary structure to which the beneficiary belongs to. The extra or additional benefits suitable for the pension fund are added to the contribution. It is not necessary that the beneficiary needs to contribute excess funds to the pension fund.

Accumulated benefit obligation: Contribution towards the pension fund is calculated based on a formula that takes into account the service of t...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: The following facts pertain to a non-cancelable lease agreement between Alschuler Leasing Company an...

A: We will answer the first three subparts of question 1, according to our Honor code. Please submit a ...

question_answer

Q: What is the relationship of the asset turnover to the return on assets?

A: Click to see the answer

question_answer

Q: Glaus Leasing Company agrees to lease equipment to Jensen Corporation on January 1, 2020. The follow...

A: Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the que...

question_answer

Q: Peter M. Dell Co. purchased equipment for $510,000 which was estimated to have a useful life of 10 y...

A: a. No entry is required to correct the prior Years' depreciation

question_answer

Q: King Cones leased ice cream-making equipment from Ace Leasing. Ace earns interest under such arrange...

A: Short term lease: It  is a one type of lease which has maximum lease period of 1 year or less than o...

question_answer

Q: What is a short-term lease? Describe lessee accounting for a short-term lease.

A: Short-term LeaseThis is a type of leasing which has a maximum lease term ranging from 1 year or less...

question_answer

Q: Holmes, Inc. expects net cash flow from operating activities to be $160,000, and the company plans p...

A: Free cash flow: Free cash flow is defined as an evaluation of financial performance of a company. It...

question_answer

Q: Explain the following concepts: (a) bargain purchase option and (b) bargain renewal option.

A: Lease agreement refers to an agreement in which a contract is made to get the asset on lease. The le...

question_answer

Q: In calculating inventory turnover, why is cost of goods sold used as the numerator? As the inventory...

A: Inventory turnover ratio:Inventory turnover ratio is used to determine the number of times inventory...