A Company Has a Defined Benefit Pension Liability of $4,700,000

question 43

Multiple Choice

A company has a defined benefit pension liability of $4,700,000 at the beginning of the year. The company contributes $7,000,000 to the pension during the year and records a pension expense of $10,200,000. The closing balance of the defined benefit pension plan at year-end is therefore a:

• A)$7,900,000 liability
• B)$7,900,000 asset
• C)$11,700,000 liability
• D)$1,500,000 asset

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Definitions:

Incidental Benefit

A non-intended advantage or favor a party receives from a contract made between other parties.

Mortgage Payments

Regular payments made to a lender, typically composed of principal and interest, for the loan taken out to purchase property.

Original Lender

The financial institution or lender that originally provided the loan or credit to a borrower.

Insurance Policy

A contract between an insurer and the insured, outlining the terms under which the insurer agrees to compensate the insured for specific losses.