A Minimum Liability for Pension Expense Is Reported When

question 62

Multiple Choice

A minimum liability for pension expense is reported when:

• A) the projected benefit obligation exceeds the fair value of pension plan assets.
• B) the pension expense reported for the period is greater than the funding amount for the same period.
• C) the accumulated benefit obligation exceeds the fair value of pension plan assets.
• D) vested benefits exceed the fair value of pension plan assets.

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Definitions:

Expected Total Cash Flows

An estimation of all cash inflows and outflows associated with an investment over its expected life, used to gauge its profitability.

Average Rate of Return

A financial ratio indicating the average annual return earned through an investment over its lifetime, expressed as a percentage of the initial investment cost.

Net Income

The total earnings of a company after subtracting all costs and expenses from revenue.

Net Cash Flow

The difference between a company's cash inflows and outflows over a period, indicating overall liquidity.