How Is Interest Cost Calculated for a Defined Benefit Pension

question 3

Multiple Choice

How is interest cost calculated for a defined benefit pension plan?

• A) Multiply the beginning balance PBO by the settlement rate.
• B) Multiply the beginning balance ABO by the settlement rate.
• C) Multiply the PBO by the expected return on the plan assets.
• D) Multiply the ABO by the expected return on the plan assets.

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Definitions:

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The series of steps undertaken by a company to report income from its operations, culminating in the publication of financial statements.

Net Asset Value

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Net Asset Valuation

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