Question

Distinguish between accounting for the employer’s pension plan and accounting for the pension fund.

Distinguish between accounting for the employer’s pension plan and accounting for the pension fund.

Homework Answers

Answer #1

The employer is the organisation sponsoring the pension plan and incurs the costs and makes contribution to the pension fund  

the Accounting for employers involves

allocation of pension cost to proper accounting periods

measuring the amount of pension obligation resulting from the plan

disclosing the status and effects of the plan

pension fund which receives the contribution from the employer and administer the pension assets and also makes the benefit payment to the pension receipts

Accounting for the fund involves identifying receipts as contributions from the employer sponspor, income from fund investment and computing the amount due to individual pension receipts

the fund should be a separate legal and accounting entity and mantains a set of books and prepares financial statements

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