The Corridor Approach

question 27

Multiple Choice

The corridor approach

• A) Is used to determine how much interest to add to the service cost and amortization of prior service in order to calculate pension expense for the period.
• B) Is used to determine the minimum amount of accumulated unamortized net gains or losses that must be amortized during the accounting period.
• C) Is used to determine the amount of prior service cost to expense each accounting period.
• D) Is use to determine the pension plan's funded status.

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Definitions:

Supplies

Materials and goods held for use in the production process or office operations, often considered short-term assets in financial accounting.

GST and PST

Taxes applied to the sale of goods and services; GST is a federal tax in Canada, while PST is a provincial sales tax.

Sold

The act of exchanging a product or service for money or other consideration.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to each number.