- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 11. Employee Compensation: Post-Employment and Share-Based
- Subject 2. Accounting for Defined Benefit Plans
CFA Practice Question
The Prepaid/Accrued Pension Cost account balance is the difference between the
B. projected benefit obligation balance and the plan assets balance.
C. vested benefit obligation balance and the plan assets balance.
A. accumulated benefit obligation balance and the plan assets balance.
B. projected benefit obligation balance and the plan assets balance.
C. vested benefit obligation balance and the plan assets balance.
Correct Answer: B
User Contributed Comments 5
| User | Comment |
|---|---|
| danlan2 | Is this the pension expense? |
| katybo | This is the net pension liability ( or net pension asset, if Plan Assets > PBO). It is not equal to pension expense. |
| yly14 | a.k.a. funding status of the plan |
| dblueroom | I thought B was funded status. Ok, it makes some sense, because essentially changes in PBO would be current pension expense and contribution is captured in plan asset (and benefits paid is in both, so cancel each other out). So from now on we should stop seeing prepaid/accrued pension cost accounts, since funded status is recognized on B.S. |
| dream007 | sounds like funded status to me... |