Shown below is a summary of the annual payroll data of Rose Co.:

-Refer to the above data. 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

Shown below is a summary of the annual payroll data of Rose Co.:
 
-Refer to the above data. 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.

Quizplus · Accepted Answer

When a company has a fully-funded pension plan, the dollar amounts paid to retirees are greater than the amounts recognized as pension expense by the employer because the plan has sufficient assets to cover all of its obligations to retirees.

Shown Below Is a Summary of the Annual Payroll Data