CFA Practice Question

There are 520 practice questions for this study session.

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.
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