CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Liverpool Co. had a cumulative unrecognized loss of $25,000,000 on January 1, 2011. At that time, the fair value of pension-related assets was $300,000,000, and the projected benefit obligation was $275,000,000. What is the corridor threshold for 2011?
A. $1,666,667.
B. $2,500,000.
C. $30,000,000.
Explanation: $30,000,000 is 10% of the value of the pension assets. The threshold is 10% of the larger of the fair value of pension assets or the projected benefit obligation.

User Contributed Comments 4

User Comment
danlan2 10% of the larger one.
volkovv Corridor is computed as 10% of the greater of the PBO or the market-related value at the beginning of the year.
rameencool p 133 : The corridor amount is computed as 10% of the greater of the PBO or the MARKET-RELATED plan asset value at the beginning of the year.
Amir1 Since unrecognized actuarial loss $25 < 10% of the greater of DBO or FVPA $30 => there is no excess actuarial loss to amortize in order to smooth the I/S and therefore we are inside the 10% corridor.
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