If the Projected Benefit Obligation of a Defined Benefit Pension

question 2

Multiple Choice

If the projected benefit obligation of a defined benefit pension plan exceeds the fair value of the pension plan assets, the employer must report

• A) The difference as a liability in the balance sheet and a corresponding adjustment to the amount of pension expense reported in earnings.
• B) The difference as a liability in the balance sheet and a corresponding adjustment to other comprehensive income, net of deferred income taxes.
• C) The difference as an asset in the balance sheet and a corresponding adjustment to the amount of pension expense reported in earnings.
• D) The difference as an asset in the balance sheet and a corresponding adjustment to other comprehensive income, net of deferred income taxes.

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Definitions:

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and products that are close substitutes, leading to price competition.

Market Price

Market price is the price at which a good or service is bought and sold in the marketplace, determined by the forces of supply and demand.

Long-Run Equilibrium

A state in which all inputs can be adjusted by firms, and no firm has an incentive to change its production level, leading to a stable economic condition.

Market Demand

The total quantity of a good or service that all consumers in a market are willing and able to purchase at various prices.