How is the pension expense influenced by changes in the pension liability and plan assets?
How is the pension expense influenced by changes in the pension liability and plan assets?
Pension Expense:
These are the costs that are associated with the pension plans and these expenses are reported on the (IS) income statement of the company. Its primary component is the service cost. Pension plans are the retirement plans where an employer has to contribute to a pool of funds which is set aside with the motive of future benefit of the worker.
Pension Liability:
Pension Liabilities are the resultant differences that occurred by deducting the money companies have in hand to make pension payments from the overall amount which is due to the retirees. Simply these are the future payouts that companies are obligated to pay.
Plan assets:
These refer to the assets or investments of a pension plan. These assets are only used for the pension plan and not for any other purpose.
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