Question

(1)An employer may account for a pension plan using a defined-contribution plan or a defined- benefit plan:

(a) In two paragraphs, please explain the difference in these plans and (b) who will bear the risk of loss under each plan.

What entries (debits and credits) will be made by the employer for pension expense under a defined-contribution plan and how will the amount for pension expense be determined

What entries (debits and credits) will be made by the employer for pension expense under a defined-benefit plan and how will the amount for pension expense be determined?

In one paragraph, please explain why some defined benefit plans may have the item prior service cost amortization while another defined benefit plan may not have this line item when calculating pension expense.

please not investopedia or copy pasting thanks

Answer 1

You commonly don't surrender any of your paycheck to participate in a defined benefit plan. Your employer does. However, you do need to place your own cash into a defined contribution plan like a 401(k) or a 403(b). Clearly, a defined benefit plan is a vastly improved arrangement for you.

Since defined benefit plan are more expensive for bosses than defined contribution plan, the majority of them have - you got it - downsized drastically or dispensed with these plans by and large as of late. On the off chance that you despite everything have a defined benefit plan at your organization, view yourself as fortunate.

A few bosses offer both defined benefit plan and defined contribution plan. On the off chance that yours does, you should take an interest in the defined contribution plan also. That is on the grounds that a cdefined benefit plan on its own imaginable won't be sufficiently liberal to let you live serenely in retirement.

What entries (debits and credits) will be made by the employer for pension expense under a defined-contribution plan and how will the amount for pension expense be determined.

DR Pension Expense

CR Cash

This arrangement indicates how much money the employer needs to add to the benefits plan.

What entries (debits and credits) will be made by the employer for pension expense under a defined-benefit plan and how will the amount for pension expense be determined?

To record company contribution to pension

DR Defined Benefit Pension Liability   

CR Cash   

To record pension expense

DR pension expense   

CR Defined Benefit Pension Liability