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Basic Question 6 of 24
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? |
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Learning Outcome Statements
explain and calculate measures of a defined benefit pension obligation (i.e., present value of the defined benefit obligation and projected benefit obligation) and net pension liability (or asset);
describe the components of a company's defined benefit pension costs;
explain and calculate the effect of a defined benefit plan's assumptions on the defined benefit obligation and periodic pension cost;
CFA® 2025 Level II Curriculum, Volume 2, Module 11.