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Complexities of Leasing, Taxation, Error Correction and Changes in Accounting

In: Business and Management

Submitted By Pjcamp34
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Pages 3
Complexities of leasing, taxation, error correction and changes in accounting
Phase 3
Group Project/Group A
Paula Campbell
Colorado Technical University Online
Professor Monica Phillis ACC346-0902A-01: Intermediate Accounting II
April 28, 2009
The accounting team has thoroughly researched the defined contribution plan, defined benefit plan and simple plan that are under consideration to install at BC Corporation. The defined benefit plan is the most costly and complex plan. It also carries an excise tax if the minimum contribution requirement is not met. The simple plan is just what it implies simple with limited options. The defined contribution plan has many advantages for the employer as well as the employee. It is less costly than the defined benefit plan and is easier to administer. This plan is also tax advantaged due to the contributions and earnings being tax deferred money. The advantages for the employee are it’s portable, has strong growth potential and the contributions are pre-tax. (Sepe, J., Spiceland, D., & Tomassini, L., 2007) With these advantages we can predict greater participation in the plan. Our recommendation is the defined contribution plan. It is the most advantageous for the business and can grow as we grow. The accounting for the defined contribution plan will reflect on the income statement and balance sheet. For the income statement the amount of the contribution is recorded as an operating expense usually under administrative or general expense. This is recorded when the employee earns the benefit. For the balance sheet there is no entry if the employee is paid the benefit in the same period as it was earned. However, if the benefits are earned and paid in different periods a liability will be recorded typically under accrued salary or other accrued expenses. This liability will remain on the books…...

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