Companies must include a net long-term liability on its balance sheet for pensions if
A)the pension expense is more than the pension liability.
B)the fair value of the pension obligation is more than the cash invested yearly.
C)the fair value of the pension obligation is less than the cash invested yearly.
D)the fair value of the pension fund assets are less than the pension obligations.
E)the fair value of the pension fund assets are greater than the pension obligations.

Question

Quizplus · Accepted Answer

The net long-term liability for pensions should be included on the balance sheet if the fair value of the pension fund assets is less than the pension obligations. This means that the company does not have enough assets in its pension fund to cover its pension obligations, which creates a long-term liability for the company.

Companies Must Include a Net Long-Term Liability on Its Balance