Final answer:
The actual return on plan assets, when positive, reduces the annual pension expense, not increases it, making the correct answer 'false'.
Step-by-step explanation:
The question relates to how the actual return on plan assets impacts the calculation of annual pension expense for a company. Contrary to the statement, if the actual return on plan assets is positive, it is actually added to the pension expense, not subtracted. The annual pension expense calculation includes several components such as service cost, interest on the pension liability, expected return on plan assets, and gains or losses on plan assets. When the actual return is higher than what the company expected, it creates a gain which reduces the pension expense. Therefore, the correct answer to this question is false.