Question

Which one of the following is not a component of pension expense

a. actual return on plan assets
b. amortization of prior service cost
c. amortization of projected benefit obligation
d. gain or loss

Answer 1

Amortization of projected benefit obligation is not a component of pension expense; the components include service cost, interest, expected return on plan assets, and recognition of gains and losses.

Step-by-step explanation:

The component that is not a part of pension expense is c. amortization of projected benefit obligation. The components of pension expense generally include service cost, interest on the projected benefit obligation, expected return on plan assets, amortization of prior service cost, and the recognition of gains and losses.

Pension expense calculation is a critical piece of accounting for companies that offer pension benefits to their employees. It reflects the annual cost of the benefits earned by employees during the year plus other costs or credits associated with the pension plan.