Asked by Samantha Shaughnessy on Jun 20, 2024
Verified
The pension asset/liability reported within the balance sheet must reflect the funded status of the pension plan.
Pension Asset/Liability
Represents the surplus or deficit in a company's pension plan, indicating whether assets are sufficient to cover pension obligations.
Funded Status
The financial status of a pension plan, usually indicating the extent to which assets cover liabilities.
- Understand the impact of pension plan economics on financial statements and balance sheets.
Verified Answer
CP
Casey PapabearJun 24, 2024
Final Answer :
True
Explanation :
The funded status of a pension plan refers to the difference between the fair value of assets and the projected benefit obligation (PBO) of the plan. This funded status should be reflected in the balance sheet as an asset or liability, depending on whether the fair value of plan assets exceeds or is less than the PBO. Thus, the statement is true.
Learning Objectives
- Understand the impact of pension plan economics on financial statements and balance sheets.
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