When a company has a fully-funded pension plan:
A) The dollar amounts paid to retirees are greater than the amounts recognized as pension expense by the employer.
B) Pension expense is equal to the cash payments made to retirees during the current period.
C) No pension expense is recognized in the income statement.
D) It does not use the services of a trustee to operate the pension plan.

Question

Quizplus · Accepted Answer

The dollar amounts paid to retirees are greater than the amounts recognized as pension expense by the employer because the employer is making contributions to the plan in addition to the payments made to retirees.

When a Company Has a Fully-Funded Pension Plan