Gains and Losses That Relate to the Computation of Pension

question 15

Multiple Choice

Gains and losses that relate to the computation of pension expense should be

• A) Recorded only if a loss is determined.
• B) Recorded currently as an adjustment to pension expense in the period incurred.
• C) Amortized over a 15-year period an amount in excess of the accumulated benefit obligation.
• D) Recorded currently and in the future by applying the corridor method which provides the amount to be amortized

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Definitions:

Callable Bond

A type of bond that gives the issuer the right to redeem the bond at a predetermined price before its maturity date.

Yield To Call

The rate of return anticipated on a bond if it is held until the call date, before the bond's maturity date.

Par Value

The face value of a bond or stock, representing the amount the issuer will return to the holder at maturity.

Current Yield

The annual income (interest or dividends) divided by the current price of the security.