Which of the following items should be included in pension expense calculated by an employer who sponsors a defined-benefit pension plan for its employees?
Amortization of
Fair value prior
of plan assets service cost
a. Yes Yes
b. Yes No
c. No Yes
d. No No
Answer: No Yes
The computation of pension expense includes all the following except
a. service cost component measured using current salary levels.
b. interest on projected benefit obligation.
c. expected return on plan assets.
d. All of these are included in the computation.
Answer: service cost component measured using current salary levels
The relationship between the amount funded and the amount reported for pension expense is as follows:
a. pension expense must equal the amount funded.
b. pension expense will be less than the amount funded.
c. pension expense will be more than the amount funded.
d. pension expense may be greater than, equal to, or less than the amount funded.
Answer: pension expense may be greater than, equal to, or less than the amount funded.
