According to the FASB, Recognition of a Liability Is Required

question 10

Multiple Choice

According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

• A) requires recognition of an asset.
• B) requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount.
• C) recommends recognition of an asset but does not require such recognition.
• D) does not permit recognition of an asset.

---

Definitions:

Merchant

An individual or business involved in the wholesale purchase or retail sale of goods for profit.

Non-necessary Item

Refers to goods or services that are not essential for survival or basic living and are often categorized as luxury or discretionary purchases.

Minor

A person under the age of legal adulthood, which varies by jurisdiction but is commonly 18 years old.

Contract

A legally enforceable agreement between two or more parties with mutual obligations.