The service cost component of a defined benefit pension plan is computed as the

Question

Quizplus · Accepted Answer

The service cost component of a defined benefit pension plan is the present value of the change in pension liability that arises from additional employee service during the period. It is calculated based on actuarial assumptions and takes into account the future benefits that employees are expected to earn based on their additional years of service. Therefore, option C is the correct answer. Option A is incorrect because it refers to the change in the accrued pension liability, which includes both the service cost and other components. Option B is incorrect because it suggests using the actual value instead of the present value, and option D is incorrect because it ignores the discounting of future pension benefits.

The Service Cost Component of a Defined Benefit Pension Plan