In accounting for pension costs,any difference between current year's pension expense and contribution into the pension trust should be reported as a(n):
A) offset to pension plan assets.
B) accrued actuarial liability.
C) deferred pension liability/cost.
D) operating expense of the current period.

Question

Quizplus · Accepted Answer

Any difference between the current year's pension expense and contribution into the pension trust represents an amount that is either underfunded or overfunded. If the contribution is less than the expense, it means that the company has underfunded its pension obligations, which creates a deferred pension liability. Conversely, if the contribution is greater than the expense, it means that the company has overfunded its pension obligations, which creates a deferred pension cost. Therefore, the best choice is C, deferred pension liability/cost.

In Accounting for Pension Costs,any Difference Between Current Year's Pension