Reference no: EM132621162

Questions -

1. Recorded pension expenditures are not always influenced by actuarial computations.

Hayward City maintains a defined benefit pension plan for its employees. In a recent year, the city contributed $5 million to its pension fund. However, its annual pension cost as calculated by its actuary was $7 million. The city accounts for the pension contributions in a governmental fund.

2. Record the pension expenditure in the appropriate fund.

Suppose in the following year the city contributed $6 million to its pension fund, but its annual pension cost per its actuary was only $5 million. Prepare the appropriate journal entries.

Briefly justify why you did, or did not, take into account the pension cost as calculated by the actuary.