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why when benefit paid, both assets and obligation decrease. what the assets refer to ?
Just consider the asset in the defined benefit plan as some sum of cash that you collect to be able to pay the benefit later.
So generally, as you have an obligation and you pay off some money to an employee, usually you would debit the liability and credit cash. And that’s what you do here – you credit the asset that you have accumulated for this purpose. The asset can have a form of cash or other cash equivalent.
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