- CFA Exams
- CFA Level I Exam
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 28. Non-current (Long-term) Liabilities
- Subject 10. Defined Contribution and Defined Benefit Pension Plans
CFA Practice Question
Service cost recognized in an employer-sponsored defined benefit plan and included in the net pension expense calculation represents the ______.
A. increase in the projected benefit obligation resulting from the passage of time
B. actuarial present value of benefits attributed by the pension benefit formula to an employee during a period
C. amortization of the discount on unrecognized prior service costs
Explanation: Per SFAS No. 87, service cost is defined as the actuarial present value of benefits attributed by the pension benefit formula to an employee during a period.
User Contributed Comments 2
| User | Comment |
|---|---|
| danlan2 | B is for interest cost. |
| saaythong | Or to all employees during a period. B is also not correct because it increases as a result of service, not simply the passage of time. |