Question

The unexpected gains or losses that result from changes in the projected benefit obligation are called

asset gains & losses/liability gains & losses
a. yes/yes
b. no/no
c. yes/no
d. no/yes

Answer 1

The unexpected gains or losses from projected benefit obligation changes are liability gains & losses; the answer is d. no/yes.

Step-by-step explanation:

The unexpected gains or losses that result from changes in the projected benefit obligation are referred to as liability gains & losses. These are associated with pension plans and are related to the variations between projected and actual pension costs. When the actual experience differs from what was expected, this can result in gains or losses for the entity sponsoring the pension plan. The counterpart for the assets side are referred to as asset gains & losses, which relate to the actual returns on the pension plan's investments compared to the expected returns. Given the definitions, the answer to the question would be d. no/yes, because liability gains & losses are not related to asset gains & losses directly, but instead to changes in projected benefit obligations while asset gains & losses are tied to the returns on pension plan assets.