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Basic Question 5 of 15
All of the following increase pension expense except ______.
B. interest on the liability
C. amortization of prior service cost
D. actual return on plan assets
A. service cost
B. interest on the liability
C. amortization of prior service cost
D. actual return on plan assets
User Contributed Comments 5
| User | Comment |
|---|---|
| dblueroom | actual return on plan asset doesn't affect reported pension expense, however does reduce economic pension expense. |
| DariSH | Economic pension expense as in liability-side funded status? |
| davidt876 | thanks dblueroom |
| davidt876 | is it that in a defined benefit pension, the positive return on the pension assets means you can pay less cash into the fund, but the accounting expense is the same. just some of the accounting expense is paid for by the return on the assets? |
| davidt876 | i'm really stuck on this.. the rest of the questions suggest that actual return is subtracted from pension expense. so i think this question assumes that actual return on pension assets is positive and therefore reduces pension expense - anyone? |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
explain the financial reporting of defined contribution, defined benefit, and stock-based compensation plans
CFA® 2025 Level I Curriculum, Volume 2, Module 8.