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Basic Question 13 of 24
Which of the following is formally recognized in the accounts of a company?
B. Plan Assets.
C. Projected Benefit Obligation.
A. Prepaid/Accrued Pension Cost.
B. Plan Assets.
C. Projected Benefit Obligation.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan2 | Is this the pension expense? |
| millertime | PBO is an off-balance sheet liability, the assets are held in trust so it cannot be recognized, as they ulimtately belong to planholders. Unrecognized service cost is N/A. - amortized component of PE.Through process of elimination,it has to be A. Prepaid/Accrued cost are accural accounts that must be recognized (matching principle) vs cash basis. |
| Yurik74 | millertime - do not agree. Companies're not obliged to create a separate fund for pension obligations. However they do not report pension obligation and asset on BS but rather, due to GAAP and IFRS rules, a funded status which can be an asset or liability |
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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.