How is the pension expense calculated for a defined-contribution plan?
A)Based on the contributions made by the employer that year.
B)Based on the expected portion of future benefits that were earned that period.
C)Based on the expected portion of current benefits that were earned that period
D)Based on the amount that the employer should contribute this year to meet the future expected benefit earned this year.

Question

Quizplus · Accepted Answer

The pension expense for a defined-contribution plan is based on the contributions made by the employer that year. This is because the employer's obligation is only to contribute a certain amount to the plan each year, and there is no guarantee of a specific benefit amount for the employee upon retirement. Therefore, the expense is simply the amount of contributions made by the employer for that period.

How Is the Pension Expense Calculated for a Defined-Contribution Plan