Which of the following statements is true concerning prior service cost?

Question

Quizplus · Accepted Answer

Prior service costs refer to the costs of retroactive benefits awarded to employees when a pension plan is amended. These costs are recognized as a liability at the time of the plan amendment because the company now has an obligation to provide these additional benefits. Additionally, prior service costs are reported as a component of other comprehensive income (not as a negative element) until they are amortized into pension expense over time. Therefore, all the statements provided are correct in the context of accounting for prior service costs under pension accounting standards.

Which of the Following Statements Is True Concerning Prior Service