What Is True of the Interest Cost Component of the Pension

question 8

Multiple Choice

What is true of the interest cost component of the pension expense?

• A)ASPE specifies that enterprises should use the yields on high-quality corporate bonds.
• B)IFRS specifies that enterprises should use the yields on high-quality short-term corporate bonds.
• C)It represents the increase in the pension obligation due to the passage of time.
• D)IFRS specifies that enterprises should use the yields on medium-quality corporate bonds.

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Definitions:

Payments

The act of transferring money or its equivalent in exchange for goods, services, or to fulfill a legal obligation.

Fixed Costs

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Variable Costs

Expenses that vary directly with the level of production or output, including costs such as raw materials and labor directly involved in manufacturing.

Price Changes

Alterations in the cost of goods or services over time, which can be influenced by factors such as supply and demand.