With respect to estimate changes in pension assumptions, an investment return increase will have what probable effect?
A) A decrease in the expected return on plan assets
B) A decrease in pension expense
C) Both A and B are correct.
D) None of these choices is correct.

Question

Quizplus · Accepted Answer

An estimate change of increased investment returns will most likely decrease pension expense.
Use the following information to answer questions 16 through 20.
Caroline Company began operations in 2015. The company reported $128,000 of depreciation expense on its income statement in 2015 and $84,000 in 2016. On its tax returns, the company deducted $192,000 for depreciation in 2015 and $112,000 in 2016. The 2016 tax return shows a tax obligation (liability) of $132,000 based on a 40% tax rate.

With Respect to Estimate Changes in Pension Assumptions, an Investment