In Computing the Service Cost Component of Pension Expense, the FASB

question 45

Multiple Choice

In computing the service cost component of pension expense, the FASB concluded that

• A) the accumulated benefit obligation provides a more realistic measure of the pension obligation on a going concern basis.
• B) a company should employ an actuarial funding method to report pension expense that best reflects the cost of benefits to employees.
• C) the projected benefit obligation using future compensation levels provides a realistic measure of present pension obligation and expense.
• D) All of these answers are correct.

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Definitions:

Uniform Commercial Code

A comprehensive set of laws governing all commercial transactions in the United States, intended to harmonize the law among the states.

Actual Knowledge

Direct and clear awareness of information, facts, or circumstances without any need for inference.

Notice

A formal announcement or warning given to a person or the public, related to contractual agreements, legal actions, or any situation requiring informed consent.

Incidental Beneficiary

One who unintentionally gains a benefit from a contract between other parties.