Question

A government has a single-employer defined benefit pension plan for the employees of its Electric Utility Enterprise Fund. On December 31, 2020, the government had a total pension liability for the plan of $1,300,000 and accumulated pension plan assets to pay the liability of $780,000. The assets to pay the liability are reported as a part of the Enterprise Fund's unrestricted fund balance. Assuming no pension liability had been recorded in the Enterprise Fund on December 31, 2019 and there is no pension related deferred inflows or outflows of resources, what journal entry does the government need to make to record the government's pension liability on December 31, 2020 in its Enterprise Fund?

Answer 1

AnswerEnterprise Fund Dr. 1,300,000

Pension Fund CR. 1,300,000

Narration recognition of outstanding pension fund.

Note This will throw the Enterprise fund into a deficit of $520,000

To provide for the deficit

Income Dr. 520,000

Enterprise fund CR 520,000

Narration. Recognition of pension not covered by asset.