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Basic Question 7 of 24
The actual return on plan assets should increase annual pension expense. True or False?
User Contributed Comments 5
| User | Comment |
|---|---|
| bmeisner | What if the actual return is negative? The question should be true, false or uncertain with uncertain the correct answer. |
| sags | and in anyway we use long term rate of return on assets to compute pension expense and not actual return on plan assets.... |
| Nightsurfer | Pension expense uses expected return not actual return. |
| kodali | Good point NightSurfer ! |
| emilhaque | The actual return could increase or decrease annual pension expense. It "should" not automatically increase it. |
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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.