The amount of pension expense that a government should recognize in its government-wide financial statements during the current year is
A) The amount paid.
B) The amount paid plus the amount that will be paid with available expendable financial resources.
C) The amount paid so long as it does not exceed the contractually agreed amount.
D) The contractually agreed amount.

Question

Quizplus · Accepted Answer

The correct answer is D, the contractually agreed amount. In government-wide financial statements, pension expense should reflect the full amount of the expense as determined by the terms of the pension plan, which is the contractually agreed amount, regardless of the amount actually paid during the year.

The Amount of Pension Expense That a Government Should Recognize