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kompoz [17]
3 years ago
6

During 2016, Abbott Laboratories decreased its discount rate used to calculate pension obligation from 4.3% to 3.8%. The effect

on the company's pension expense for the year and pension obligation balance at year end is: A. Decrease pension expense, increase pension obligation B. No effect on pension expense, decrease pension obligation C. Increase pension expense, decrease pension obligation D. Decrease pension expense, decrease pension obligation E. Increase pension expense, increase pension obligation
Business
1 answer:
Aleksandr-060686 [28]3 years ago
7 0

Answer:

B. Decrease pension expense, increase pension obligation

Explanation:

Decrease in discount rate decreases the interest cost for the year which in turn reduces the pension expense for the year.

Pension obligation is the present value of future payments. By reducing the discount rate, present value increases, thus, pension obligation increases.

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Answer:Yes it should be reported.

$2.8 million should be reported in the the balance sheet as a liability.

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Before they can be reported in financial statement, it must be able to estimate the value of such contingent liability and the liability must have a higher than 50% possiblity of being achieved.

If the value can be estimated, then the liability has a higher chance of being realised.

Qualifying contingent liabilities such as the $2.8 million estimated by Top Sound International should be recorded in the income statement as an expense and a liability on the balance sheet.

Therefore the $2.8 million liability should be reported in its 2018 balance sheet

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2 years ago
Which agency is responsible for approving states' special education plans and releasing idea funds accordingly?
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