Accounting for the employer's contribution to a defined benefit pension plan is straight forward, because the employer is obligated only to make annual contributions in the amount specified in the plan terms.

Question

Quizplus · Accepted Answer

In a defined benefit pension plan, the employer's obligation is to provide a specified level of pension benefits to employees upon retirement, which means the employer must contribute enough to the plan to ensure it can meet these future obligations. This requires actuarial calculations to estimate future benefit payments and can be complex, not simply making annual contributions of a specified amount.

Accounting for the Employer's Contribution to a Defined Benefit Pension