Companies should recognize the entire increase in projected benefit obligation due to a plan initiation or amendment as pension expense in the year of amendment.

Question

Quizplus · Accepted Answer

According to accounting standards, when a pension plan is initiated or amended, the costs associated with the increase in projected benefit obligation are not recognized entirely as pension expense in the year of the amendment. Instead, these costs are typically amortized over the service lives of the employees expected to benefit from the plan amendment.

Companies Should Recognize the Entire Increase in Projected Benefit Obligation