Question

Which of the following is a correct statement concerning the reporting of the funded status of...

Which of the following is a correct statement concerning the reporting of the funded status of a defined benefit pension plan in the balance sheet?

Only the fair value of plan assets is reported as an asset

Only the projected benefit obligation (PBO) is reported as a liability

The fair value of plan assets is separately reported as an asset and the PBO is separately reported as a liability

None of the above

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Homework Answers

Answer #1

Answer : None of the above

Explanation :

when the fair value of plan assets exceeds the projected defined benefit obligation, a net pension asset equal to the excess of fair value of plan assets over the projected benefit obligation is reported on the balance sheet.

On the other hand, if the projected defined benefit obligation exceeds the fair value of plan assets, a net liability equal to the excess of defined benefit obligation over the fair value of plan assets is reported on the balance sheet.

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