Accounting Principles for Defined Benefit Pension Plans Under IFRS Differ

question 39

Multiple Choice

Accounting principles for defined benefit pension plans under IFRS differ from U.S.GAAP in all of the following areas except that under IFRS

• A)certain components of pension expense may be reported as a part of different line items in the income statement
• B)actuarial gains and losses may be recognized in full in the period in which they occur directly into equity
• C)any portion of prior service cost that is not vested must be recognized on the balance sheet as a component of other comprehensive income
• D)any portion of prior service cost that is immediately vested must be expensed

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Definitions:

Net Annual Operating

Typically refers to the net operating income or profit generated by a business over the course of a year, excluding non-operating revenues and expenses.

After-Tax Discount Rate

The rate used to discount future cash flows of an investment after taxes have been accounted for, reflecting the investor's required rate of return net of taxes.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity.

Straight-Line Depreciation

This method evenly allocates the cost of an asset over its useful life.