In computing the service cost component of pension expense, the FASB concluded that
A) the accumulated benefit obligation provides a more realistic measure of the pension obligation on a going concern basis.
B) a company should employ an actuarial funding method to report pension expense that best reflects the cost of benefits to employees.
C) the projected benefit obligation using future compensation levels provides a realistic measure of present pension obligation and expense.
D) all of these.

Question

Quizplus · Accepted Answer

The FASB concluded that using the projected benefit obligation, which incorporates future compensation levels, provides a more realistic measure of the present pension obligation and expense, as it accounts for expected salary increases.

In Computing the Service Cost Component of Pension Expense, the FASB