Reference no: EM132619699

Question - Please help with the following exercise related to Governmental Accounting:

Sycamore School District's Statement of Fiduciary Net Position for its defined benefit pension plan shows the following amounts (in condensed form and in thousands)

Assets

Cash and short-term investments: $66,140

Receivables: $49,946

Investments at fair value: $3,565,931

Total assets: $3,682,017

Liabilities

Benefits payable to current employees and retirees: $4,214

Net position: $3,677,801

The plan has been in operation for over 20 years and covers all school district employees.

a) What is the most reasonable explanation of why the benefits payable to current employees and retirees is so small relative to plan assets?

The district's annual required contribution is $6,300,000 for the current year. In the past, the district has always paid the annual required contribution in full. However, for the current year, the district budgeted and paid $5,000,000 into the Pension Trust Fund.

b) Prepare the journal entry that the district (not the plan) should make to record this year's pension contribution. (Since the plan is accounted for in a governmental fund, a budgetary or closing entry is not necessary.)

c) Prepare the journal entry to record this year's pension contribution for reporting in the district's government-wide statements.

You are looking at the district's Comprehensive Annual Financial Report, specifically in the Pension Plan section of the Notes to the Financial Statements. Information in the note indicates that the district's "normal cost" was $530,000 and that "amortization of the unfunded actuarial accrued liability" was $100,000.

d) What is meant by "normal cost?"

e) What is meant by "unfunded actuarial accrued liability"?