When a company sets up a defined contribution pension plan, the ________ bears all the risk, and the ________ receives all the return from the plan's assets.

When a company sets up a defined contribution pension plan, the bears all the risk, and the receives all the return from the plan's assets.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter12: Liabilities: Off-balance-sheet Financing, Retirement Benefits, And Income Taxes

Section: Chapter Questions

Problem 6Q

See similar textbooks

Related questions

Q: The following information relates to the pension plan for the employees of Turner Co.: 1/1/20…

A: Define Benefit Obligation It is the popular method which are used to determine the retirement…

Q: A company currently offers it’s employees a defined benefit pension plan, but is looking into…

A: Defined Benefit pension plan A defined-benefit plan is an employer-sponsored retirement plan where…

Q: explain how a defined contribution pension plan works.

Q: Under a defined contribution pension plan _________________ bear the investment risk, while under a…

A: Lets understand the meaning of defined benefit plans and defined contribution plan. Defined benefit…

Q: Dunder Miflin uses defined contribution plans for their employees. A formula that is used in a…

A: Pension: Pension is a cash payment given to the employees at the time of their retirement. The…

Q: Boston Company has retirement plan which entitles its employees to an amount equivalent to the…

A: Employees receive pension related benefits as a part of their employment contracts. It is an…

Q: Which of the following factors is least likely to affect the amount of retirement benefits under a…

A: Defined benefit pension plans are the retirement designs that include providing a fixed and…

Q: In a defined contribution plan, a formula is used that: Ensures that pension expense and the cash…

A: Post employment benefit plans classified into 1: defined contribution plan 2: defined benefit plan…

Q: Evaluate this statement: The excess of the actual return on plan assets over the expected return…

A: Plan assets: The assets which are used to satisfy the postretirement obligation, are held as a…

Q: Lamont Corporation has a pension plan in which the corporation makes all contributions and employees…

A: Pension plan: This is the plan devised by corporations to pay the employees an income after their…

Q: Under a defined-benefit plan, a company has an unexpected gain of $902,000 due to plan asset…

A: Given, Under defined benefit plan, Unexpected gain = $902000

Q: Under a noncontributory plan, only the employee makes contributions to the retirement benefit plan.…

A: Under a non contributory pension or defined benefits plan, only an employer contributes and no…

Q: Describe how a company's pension plans are reported when there are many plans, some of which are…

A: Organizations establish a single pension plan for its employees. However, some organizations have…

Q: The two main types of pension plans are defined benefit plans and defined contribution plans.…

A: Pension plan: Pension plan is an agreement between the employer and employee. After the retirement…

Q: If a pension plan is both contributory and qualified, it is

A: First let us understand the key terms in the question. Pension plan- A Pension plan is an…

Q: Defined contribution plans and defined benefits plans are two common types of pension plans.choose…

A: The question pertains to two types of retirement plans. Under defined benefit plans, a fixed amount…

Q: aised over how the pension fund is being managed. Some employees are upset that CEA Fund Managers…

A: A diversified asset allocation strategy is considered to be best for mitigating the risk and…

Q: The following information relates to the pension plan for the employees of Ivanhoe Co.: 1/1/20…

A: Calculation of actual return on plan assets Fair value of plan assets on 31/12/21 = 12254000 Fair…

Q: Describe the reporting of pension plans for a companywith multiple plans, some of which are…

A: Multiple pension plans:Companies maintain a single pension plan for their employees. But some…

Q: What does the “pension asset” represent? Are you interviewing with a company whose pension plan is…

A: Pension Obligation: It refers to the commitment provided by the employer to pay its employees, the…

Q: Bill Haley is learning about pension accounting. He is convinced that in years when companies record…

A: Other comprehensive income: Revenues, expenses, gains and losses that are excluded from net income…

Q: Which of the following correctly describes defined benefit (DB) pension plans? A-A typical example…

A: Defined benifit is also written as DB. It is the pension plan in which the employee will receive the…

Q: Under a nonqualified pension plan, I. the yearly earnings on the pension plan assets are taxable…

A: Non qualified Pension Plan are Non qualified because it does not comply with Employee Retirement…

Q: What is a private pension plan? How does a contributorypension plan differ from a noncontributory…

A: Pension: A fixed sum of money, receivable in future or after the age of retirement, which the…

Q: Gains and losses can occur with pension plans when: A) Either the PBO or the return…

A: ABO or Accumulated Benefit Obligation is an indicator of a company's pension liability at a given…

Q: In a defined contribution plan, a formula is used that: O Requires an employer to contribute a…

A: Defined contribution plans are funded by the employees and the amount if collected for their…

Q: In the discussion of employees' pension plans, your book talks about two pension plans - Defined…

A: Both contributed on regular basis.

Q: A defined-contribution plan specifies the benefits the employee will receive at the normal…

A: Defined Contribution Employer Contributes specific periodic amounts of contribution to the plan…

Q: 34. In a defined-contribution plan, a formula is used that defines the benefits that the employee…

A: The defined contribution plan is strategized to benefit the employees during the time of retirement.…

Q: It refers to a plan where only the employer contributes to a retirement fund. a. Contributory plan…

A: RETIREMENT FUNDS: These are the investment options that allow…

Q: Classify the following fixed costs as normally being either committed or discretionary:e. Pension…

A: Committed cost: Committed cost is incurred as a result of organizations’ ownership or use of…

Q: Indicate by letter whether each of the events listed below increases (I), decreases (D), or has no…

A: Answer: Events 1. N 2. N 3. D 4. I 5. I 6. D 7. I 8. I 9. N 10. I 11. D…

Q: What is a pension plan? What motivates a corporation to offer a pension plan for its employees?

A: Pension: A fixed sum of money, receivable in future or after the age of retirement, which the…

Q: A Keogh plan is a type of qualified pension plan for self-employed individuals. An individual or…

A: A Keogh plan is described as a type of retirement plan for individuals who are self-employed and…

Q: 35. In a defined-benefit plan, a formula is used that defines the contribution the employer is to…

A: solution concept defined-benefit plan defined-benefit plan is a plan where the benefit…

Q: It is a type of retirement plan where the benefit to be received by the employee is dependent on the…

A: Retirement plans are those in which amounts are invested periodically which accumulate until the age…

Q: The following data are for the pension plan for the employees of Oriole Company. 1/1/20 12/31/20…

A: Unexpected gain on plan assets in 2021 =Actual return on plan assets in 2021-(Plan assets at fair…

Q: The following information relates to the pension plan for the employees of Oriole Co.: 1/1/20…

A: Formula: The corridor for 2021 amount = Fair value of plan Assets on 12 / 31 / 20 X 10 %

Q: The projected unit credit method for funding a defined benefit pension plan will require payments…

A: The projected unit credit method considers expected future pay increases the computation of…

Q: Under PAS 19, employee benefits are alloforms of consideration given by an entity in exchange for…

A: The question is based on the concept of Accounting Standard on Employee Benefits.

Question

When a company sets up a defined contribution pension plan, the ________
bears all the risk, and the ________ receives all the return from the plan's assets.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Employee Retirement Income Security Act (ERISA)

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Carson Company sponsors a single-employer defined benefit pension plan. The plan provides that pension benefits are determined by age, years of service, and compensation. Among the components that should be included in the calculation, net pension cost is service cost, the interest cost, and actual return on plan assets. What two accounting problems result from the nature of the defined benefit pension plan? Why do these problems arise?
In a defined contribution plan, a formula is used that: Ensures that pension expense and the cash funding will be different Requires an employer to contribute a certain sum each period based on the formula Defines the benefits that the employee will receive at the time of retirement Ensures that the employer is at risk to make sure funds are available at retirement
Which of the following is not a characteristic of a defined-contribution pension plan? The employer's contribution each period is fixed. If the employer does not make contribution in full, then it reports a pension liability. If the employer contributes more than the required amount, then it reports a pension asset. An appropriate funding pattern must be established to ensure that the promised benefits at employees’ retirement will be met. The benefit of gain or the risk of loss from the assets contributed to the pension fund are borne by the employee.
Carson Company sponsors a single-employer defined benefit pension plan. The plan provides that pension benefits are determined by age, years of service, and compensation. Among the components that should be included in the calculation net pension cost are service cost, interest cost, and actual return on plan assets. Required: A. What two accounting problems result from the nature of the defined benefit pension plan? Why do those problems arise? B. How should Carson determine service cost component of the net pension cost? C. How should Carson determine the interest cost component of the net pension cost? D. How should Carson determine the actual return on plan assets component of the net pension cost?
In a defined-benefit plan, a formula is used that Select one: a. requires that the benefit of gain or the risk of loss from the assets contributed to the pension plan be borne by the employee. b. requires that pension expense and the cash funding amount be the same. c. defines the contribution the employer is to make; no promise is made concerning the ultimate benefits to be paid out to the employees. d. defines the benefits that the employee will receive at the time of retirement.
If an employer has a defined benefit pension plan, what components would make up its net periodic pension cost?
Under a defined contribution pension plan _________________ bear the investment risk, while under a defined benefit pension plan __________________ bear the risk. Group of answer choices employees / employees employers / employers employees / employers employers / employees