What is the journal entry when a company funds the pension plan?
When the company funds their pension plan, that means the company is contributing cash to increase the pension asset. The debit would be to pension asset/liability (either increases the asset or reduces the liability) and the credit would be to cash (since there is a cash outflow to fund the pension asset).
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How to calculate whether or not the plan asset is overfunded or underfunded?
A company’s funding status will relate to the required disclosure that companies must make regarding the status of its existing pension funds. The funded status of a pension plan will be computed as follows: Overfunded status: If the fair value of the plan’s assets are greater than the projected benefit obligation, the funded status will […]
How is the funded status of a pension plan recorded in the financial statements?
Funded status refers to if the pension plan is overfunded or underfunded. If the pension plan is overfunded, then the difference is recorded in the non-current asset section of the balance sheet. If the plan is underfunded, then the difference is recorded in the liability section of the financial statements. Classification between current and non-current […]
What is the journal entry to record a net gain on a pension asset?
First, you have to calculate the net gain or loss on the pension asset, which is explained here. Let’s assume that the company recorded a net gain. Since the company recorded a net gain, the gain impacts other comprehensive income. The journal entry to record the net gain would be a debit to pension asset/liability […]