Question

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

a. asset gains & losses
b. liability gains & losses
c. all of the above are correct

Answer 1

Unexpected gains or losses due to changes in the projected benefit obligation are known as liability gains & losses, typically associated with changes in assumptions for pension plans (c).

Step-by-step explanation:

The unexpected gains or losses that result from changes in the projected benefit obligation are called liability gains & losses. These gains or losses are associated with pension plans and other post-retirement benefits and occur when the actual experience differs from what had been anticipated in the plan assumptions. For instance, changes in life expectancy, employee turnover, and actual returns on plan assets can lead to either gains or losses relative to what the company had projected for its pension obligations.

The unexpected gains or losses that result from changes in the projected benefit obligation are called liability gains & losses. These changes occur due to various factors, such as changes in interest rates, changes in the projected life expectancy of plan participants, and changes in the expected rate of return on plan assets.