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Topic: Defered Pension cost not Defered Expense? (

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lovethepirk
Major Contributor

Joined: 10 Jul 2009
Online Status: Offline
Posts: 295

Posted: 17 Sep 2009 at 00:57 \| IP Logged

This is a simple question in a sim I just did.

Corp. determined that its accumulation benefits obligation under the pension plan exceeded the fair value of the plan's assets by 40,000. They fund total pension costs expense each year.

I did this:

Pension Expense...........xxxx
Pension Liability................xxxx

And reduced Income by the expense. I was wrong.

They did:

Deferred pension cost.......xxxx
Additional pension liability.......xxxx

Is the 'additional pension liability account' different from the 'pension liability accout' Now THEY HAVE to fund this freakin pension so why are we not reducing Net Income by the 'Deferred Pension cost'?

Thanks,

ltp

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