The Defined Benefit Obligation Is the Measure of Pension Obligation

question 23

Multiple Choice

The defined benefit obligation is the measure of pension obligation that

• A)is required to be used for reporting the service cost component of pension expense.
• B)requires pension expense to be determined solely on the basis of the plan formula applied to years of service to date and based on existing salary levels.
• C)requires the longest possible period for funding to maximize the tax deduction.
• D)is not sanctioned under international financial reporting standards for reporting the service cost component of pension expense.

---

Definitions:

Exact Simple Interest

Refers to interest calculated precisely on the principal amount of a loan or investment, without compounding, over a specific time period.

365-Day Year

A method of interest calculation that uses a full calendar year to determine the amount due.

Loan Period

The duration of time from the initiation to the full repayment of a loan.

Exact Simple Interest

A method of calculating interest that uses a base of 365 days per year, ensuring accuracy based on actual calendar days.