Assume a government makes a change in the terms of a pension increases benefits that results in an increase in its estimate of the net pension liability. The resulting change in the net pension liability will be recorded as pension expense in the period of the change.

Question

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Changes in the terms of a pension plan are to be recognized in the period in which the terms changed. A change that increases pension benefits results in an increase in pension expense and net pension liability in the year of the change.

Assume a Government Makes a Change in the Terms of a Pension