The annual pension expense for what type of pension plan(s) is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability?

Question

Quizplus · Accepted Answer

The annual pension expense for a defined benefit plan is recorded by a journal entry that includes a debit to pension expense and a credit to a noncurrent liability. This is because under a defined benefit plan, the employer is responsible for providing a specified level of retirement benefits to employees, and the annual expense is based on actuarial calculations of the projected benefit obligation and the plan's assets. On the other hand, a defined contribution plan does not involve any obligations for the employer beyond the contributions made to the plan, and the annual expense is simply the contributions made by the employer. Therefore, Option B is incorrect, and Option C is partially incorrect. Option D is also incorrect as the stated entry is correct for defined benefit plan.

The Annual Pension Expense for What Type of Pension Plan(s)