The Interest on the Defined Benefit Obligation Component of Pension

question 47

Multiple Choice

The interest on the defined benefit obligation component of pension expense

• A)reflects the incremental borrowing rate of the employer.
• B)reflects the rates at which pension benefits could be effectively settled.
• C)is the same as the expected return on plan assets.
• D)may be stated implicitly or explicitly when reported.

---

Definitions:

Investment Return

The increase or decrease in the value of an investment during a certain period, represented as a percentage of the original investment's price.

Annual Interest Rate

The percentage of a sum of money charged for its use per year.

Economic Profit

The distinction outlined between complete revenue streams and complete cost structures, considering both noticeable and subtle expenses.

Investment Return

The gain or loss on an investment over a specified period, typically expressed as a percentage of the investment’s initial cost.