Employers Use a Discount Rate to Compute the Actuarial Present

question 13

Essay

Employers use a discount rate to compute the actuarial present value of benefits,pension expense,and the obligation of the employer under the pension plan.The choice of the discount rate can have a great effect on measures of pension cost and benefit obligations.Assumptions regarding discount rates must be made carefully in order to ensure that differences in pension plans are properly reflected in the annual reports of companies sponsoring such plans.
Identify factors employers should consider when choosing the discount rate to be used in accounting for pension plans of the enterprise.

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