How is the pension expense calculated for a defined-benefit plan?
A)Based on the contributions made by the employer that year.
B)Based on the expected portion of future benefits that were earned that period.
C)Based on the expected portion of current benefits that were earned that period
D)Based on the amount that the employer should contribute this year to meet the future expected benefit earned this year.

Question

Quizplus · Accepted Answer

The pension expense for a defined-benefit plan is calculated based on the expected portion of future benefits that were earned during the period. This is determined by estimating the future benefits that employees will receive based on their years of service and compensation level, and then determining the portion of those benefits that were earned in the current period. Factors such as changes in interest rates, mortality rates, and other assumptions can also impact the calculation of the pension expense.

How Is the Pension Expense Calculated for a Defined-Benefit Plan