CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Information regarding the defined-benefit pension plan of Tri Cities Transport included the following for 2015 ($ in millions):

Service cost: 48
Interest cost: 32
Actual and expected return on plan assets: 26
Amortization of unrecognized net gain: 3
Amortization of unrecognized prior service costs: 5
Retiree benefits paid (end of year): 50

What is Tri Cities' pension expense for 2015?
A. $56 million
B. $62 million
C. $98 million
Explanation: Service cost ($48) + interest cost ($32) - expected return on plan assets ($26) -amortization of unrecognized net gain ($3) + amortization of unrecognized prior service cost ($5) [in millions]

User Contributed Comments 4

User Comment
yxten1 amortization of unrecognized net gain should be -ve.
somk yxten1; tell me about. such questions made me insult myself the most. when I find out such stupid mistakes I shout "stupid" "damn" "shoot" with an "i". CFA is degrading my self-esteem. and am afraid am gonna get used to it
sriera Virtual hug to you! somk
D3456 Here are we assuming IFRS? I was under the impression under GAAP prior service costs were amortized over the life of the employees. Can anyone shed some light?
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