Which of the Following Is a True Statement Regarding the Pension

question 15

Multiple Choice

Which of the following is a true statement regarding the pension liability and pension expense recognition requirements of SFAS No. 87?

• A)SFAS No. 87 presumes an explicit contract in calculating accrued pension expense.
• B)SFAS No. 87 uses an explicit contract view in requiring the recognition of a minimum pension liability.
• C)SFAS No. 87 may overestimate the pension liability by including future salary projections in the liability computation.
• D)SFAS No. 87 does not include future salary projections in the pension expense calculation.

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Definitions:

Cost Allocation

The process of identifying, aggregating, and assigning costs to cost objects, such as products, services, or departments.

Intangible Asset

An identifiable non-monetary asset without physical substance, such as patents, trademarks, and goodwill, that provides economic benefits.

Amortization

The process of spreading the cost of an intangible asset over its useful life.

Legal Life

The duration for which an entity, asset, or agreement is legally effective or recognized.