CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Which of the following is formally recognized in the accounts of a company?

A. Prepaid/Accrued Pension Cost.
B. Plan Assets.
C. Projected Benefit Obligation.
Correct Answer: A

User Contributed Comments 3

User Comment
danlan2 Is this the pension expense?
millertime PBO is an off-balance sheet liability, the assets are held in trust so it cannot be recognized, as they ulimtately belong to planholders. Unrecognized service cost is N/A. - amortized component of PE.Through process of elimination,it has to be A. Prepaid/Accrued cost are accural accounts that must be recognized (matching principle) vs cash basis.
Yurik74 millertime - do not agree. Companies're not obliged to create a separate fund for pension obligations. However they do not report pension obligation and asset on BS but rather, due to GAAP and IFRS rules, a funded status which can be an asset or liability
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