Under IFRS,net interest (finance)expense (revenue)with respect to defined benefit plans is best described as follows:
A) The actual return on plan assets must be reflected as a reduction of pension expense or as finance revenue.
B) A discount rate is applied to the opening projected benefit obligation amount to impute an interest (finance) charge. This amount must be reflected as an increase to pension expense.
C) The net interest (finance) expense (revenue) with respect to defined benefit plans is the difference between the opening fair values of the plan assets and projected benefit obligation. If the value of the projected benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense or finance (interest) expense. If the reverse is true, will be a decrease to pension expense or an increase to finance (interest) revenue.
D) The net interest (finance) expense (revenue) with respect to defined benefit plans is the difference between the opening fair values of the plan assets and accumulated benefit obligation. If the value of the accumulated benefit obligation exceeds the fair value of the plan assets on that date, there will be an increase to pension expense. If the reverse is true, will be a decrease to pension expense.

Question

Quizplus · Accepted Answer

Under IFRS, the net interest on the net defined benefit liability (asset) is calculated as the difference between the interest income on plan assets and the interest cost on the defined benefit obligation, both calculated using the discount rate applied to the opening balances.

Under IFRS,net Interest (Finance)expense (Revenue)with Respect to Defined Benefit Plans