- 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
All of the following increase pension expense except ______.
B. interest on the liability
C. amortization of prior service cost
D. actual return on plan assets
A. service cost
B. interest on the liability
C. amortization of prior service cost
D. actual return on plan assets
Correct Answer: D
User Contributed Comments 5
| User | Comment |
|---|---|
| dblueroom | actual return on plan asset doesn't affect reported pension expense, however does reduce economic pension expense. |
| DariSH | Economic pension expense as in liability-side funded status? |
| davidt876 | thanks dblueroom |
| davidt876 | is it that in a defined benefit pension, the positive return on the pension assets means you can pay less cash into the fund, but the accounting expense is the same. just some of the accounting expense is paid for by the return on the assets? |
| davidt876 | i'm really stuck on this.. the rest of the questions suggest that actual return is subtracted from pension expense. so i think this question assumes that actual return on pension assets is positive and therefore reduces pension expense - anyone? |