Question

At the end of 2024, Havana contributed $720 thousand to the pension fund, and benefit payments of $714 thousand were made to retirees. The expected rate of return on plan assets was 10%, and the actuary's discount rate is 7%. There were no changes in actuarial estimates and assumptions regarding the PBO.

a. True
b. False

Answer 1

The correct statement is False.

Step-by-step explanation:

The correct statement regarding the given information is False.

The net contribution to the pension fund is calculated by subtracting the benefit payments from the contribution. In this case, the net contribution would be $720,000 - $714,000 = $6,000.

The expected rate of return on plan assets and the actuary's discount rate are used to calculate the pension expense, not the net contribution. Therefore, they are not relevant to determining the net contribution to the pension fund.