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For every dollar that an employee contributes to the

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Unformatted text preview: s to the plan, Trader Joe’s contributes $0.50. Assume that during fiscal 2010, Trader Joe’s had 2,000 employees and each employee on average contributed $1,200 to the pension fund. What will Trader Joe’s recognize as pension expense in fiscal 2009? ANSWER Under a defined contribution plan Trader Joe’s does not have to worry about what is in the plan when an employee retires, it simply has to record its contribution for 91 the year as pension expense. Trader Joe’s will therefore recognize pension expense of $1,200,000 (2,000 employees x $1,200 per employee x 0.5). As an aside…Trader Joe’s is a very successful privately held company so its financial information is not publicly available…and no one is talking at the company; Trader Joe’s has never given an interview pertaining to its operations. Page 12 of 21 $ (1,011) — (22) (63) 40 — 26 END-OF-CHAPTER MATERIAL LO 1 LO 3 CASES S C-1 Analyzing Starbucks’ lease disclosures The following questions pertain to Starbucks’ 2009 balance sheet and lease footnote shown below. 1. Does Sta...
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