- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 11. Employee Compensation: Post-Employment and Share-Based
- Subject 3. Analysis of Pension Plan Disclosures
CFA Practice Question
Panther Products sponsors a defined benefit pension plan. The following information pertains to that plan:
Retiree benefits paid (end of year): 30 million.
Actual and expected return on plan assets for 2011: 105 million.
Amortization of unrecognized prior service cost: 15 million.
Interest on pension obligation for 2011: 150 million.
Service cost for 2011: 480 million.
Retiree benefits paid (end of year): 30 million.
Actual and expected return on plan assets for 2011: 105 million.
Amortization of unrecognized prior service cost: 15 million.
Interest on pension obligation for 2011: 150 million.
The pension expense that Panther should report in its 2011 income statement is:
Correct Answer: $540 million
Service cost ($480) + interest expense ($150) - expected return on plan assets ($105) + amortization of unrecognized prior service cost ($15) [in millions].
User Contributed Comments 4
| User | Comment |
|---|---|
| robkaz | Doesn't 30 million of benefit matter? Because it is paid out at the end of year? Anyone? |
| LRS24 | The $30 million paid out reduces the PBO but not the pension expense |
| ssradja | cause it is paid benefits, not pension expense |
| ljuricek | Retiree benefits are already included in Return on plan assets. |