How Does IFRS Differ from GAAP When Accounting for Defined-Benefit

question 47

Multiple Choice

How does IFRS differ from GAAP when accounting for defined-benefit pension plans?

• A) IFRS requires current period expensing of prior service costs while GAAP amortizes prior service costs over time.
• B) GAAP allows companies to add interest cost and deduct expected return from pension expense in non-operating income. IFRS allows the net interest (from PBO and plan assets) to be reported in operating or financing income.
• C) GAAP requires separate rates of interest for the PBO and expected return on plan assets. IFRS uses the same rate for both.
• D) GAAP amortizes current year net actuarial gains and losses using the corridor approach, while IFRS does not amortize actuarial gains/losses. IFRS reports actuarial gains/losses in other comprehensive income.

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Definitions:

Ultrasound

High-frequency sound waves that are reflected off a fetus or an internal organ to provide information to generate a computer image.

Fetus

A developing mammal or human from the end of the embryo stage (usually from nine weeks after fertilization in humans) until birth.

Sperm Cell

The male reproductive cell capable of fertilizing an ovum to produce offspring.

Y Chromosomes

One of the two sex chromosomes, typically determining male biological characteristics in mammals when paired with another Y or an X chromosome.