Final Answer:
The current year pension expenditure would be $153,750. Option 4 is correct.
Step-by-step explanation:
Pension expenditure refers to the total amount of money that a company, organization, or government entity spends on pension plans for its employees during a specific period, usually a fiscal year. It encompasses various elements, including:
- Contributions: The money contributed by the employer, employees, or both into the pension fund during the year.
- Benefits Paid: The payments made to retired employees or their beneficiaries from the pension fund during the year.
- Interest and Amortization: Any interest accrued on the pension liabilities or amortization of any unfunded or deferred amounts.
- Administrative Expenses: Costs related to managing and administering the pension plan, including fees for investment management, legal services, and other administrative costs.
The current year pension expenditure is calculated as follows:
Current year benefits + Amortization of deferred amounts + Net annual change in amounts normally expected to be liquidated with expendable available financial resources - Interest on prior pension liabilities = Current year pension expenditure
Plugging in the numbers from the problem, we get:
= 150,000 + 2,500 + 600 - 1,250
= 153,750
Therefore, the current year pension expenditure would be $153,750 (Option 4).
Complete question:
Airview County contributes to and administers a single-employer defined benefit pension plan on behalf of its covered employees. The following information is available for the current year:
- Current year benefits $150,000
- Actual amount contributed to the plan 145,000
- Amortization of deferred amounts 2,500
- Net annual change in amounts normally expected to be liquidated with expendable available financial resources 600
- Interest on prior pension liabilities 1,250
If the above information was for the General Fund, the current year pension expenditure would be equal to:
- a .$145,000.
- b . $145,600.
- c .$150,000.
- d . $153,750.