The projected returns exceed actual returns on pension plan assets for a government offering a defined benefit pension plan. How would the resulting increase in the net pension liability be recognized in the financial statements in the year this difference is recognized?
A) The increase in net pension liability would be expensed in the period the plan is changed.
B) The increase in net pension liability would be deferred and amortized over the remaining service life of the employees.
C) The increase in net pension liability would be deferred and amortized over five years.
D) The increase in net pension liability would be deferred and amortized over ten years.

Question

Quizplus · Accepted Answer

Changes in the net pension liability resulting from differences between projected and actual returns are required to be deferred and recognized in pension expense over five years.

The Projected Returns Exceed Actual Returns on Pension Plan Assets