Asssigment Essay Example | Topics and Well Written Essays - 1750 words

Asssigment - Essay ExampleThe management unremittingly deducts the reward contributions from the employees salaries. Another pension cast version occurs when the gild contributes the entire kernel to a lump sum pension fund account. Consequently, the employee can select a plan that generates a higher(prenominal)(prenominal) retirement benefit return. Investing in a riskier pension fund will increase retirement benefit returns. The employee can also choose other plan where the investments are funneled into a safer fund that generates a lesser benefit return (Kieso et al., 2006). Additionally, the employee can choose to suck up the retirement core in wholeness lump amount or the employee can decide to receive the retirement amount in equal monthly installment amounts. The second method allows the retired person to receive the monthly retirement benefits throughout ones lifetime (Kieso et al, 2006, p. 1244). Funding principles. The fund is also classified as a plan. The fund e ntity is a separate agency that manages companies pension plans. The fund entity receives the money invested by the company. When the employee retires, the fund company distributes the pension and other retirement benefits. The employer contributes to the pension fund and generates earnings. The employee receives benefits as pension fund recipients. The fund agency accumulates the employers contributions as either contributory or noncontributory (Kieso et al., 2006, p. 1244). Defined benefit plan. The defined benefit plan includes the amount of benefits that the employees will receive when they decide or are forced to retire. The state requires that employees are mandatorily undeniable to retire when they reach a certain age. The company allocates a regular amount for the employees retirement benefit plan. The benefits are based on the employees total pension fund contributions. Likewise, the retirement amounts are based on the salaries of the employees. Employees with higher salar ies will receive higher pension retirement benefits when compared to the salaries of the lower ranking line and staff employees (Kieso et al., 2006, p. 1211). Defined contribution plans. Under this plan, the employer contributes a regular amount to the pension trust. A formula is used to decide the monthly contributions. The formula incorporates the number of years of the employees work, the companys business profits, and the salary. The plan indicates the amount that the employers will contribute to the plan. However, the plan does not indicate the amount that the employees will receive as retirement benefits. An example is the 401 (k) plan (Kieso et al., 2006, p. 1244). Pension fund allocation. In terms of the formulation, different companies allocate different pension expense amounts for different pension fund budgets. During 2009, General Motors $98,527 pension fund required a $3,405 pension expense. During 2009, the Coca Cola Companys $3,032 pension fund amounts required a $218 pension expense budget. During the same accounting period, the Merck companys $10,835 pension fund needed a $407 pension fund expense (Kieso et al., 2009, p. 1211). Components of pension expense. In terms of formulation, accounting for pension funds entails allocating the follow of the retirement funds to the appropriate accounting period. The service cost forms a part of the pension expense total. The interest on the liability should be added