According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

a. requires recognition of an asset.

b. requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount.

c. recommends recognition of an asset but does not require such recognition.

d. does not permit recognition of an asset.

Question

Olivia Davila

Business

27 May, 01:54

According to the FASB, recognition of a liability is required when the projected benefit obligation exceeds the fair value of plan assets. Conversely, when the fair value of plan assets exceeds the projected benefit obligation, the Board

a. requires recognition of an asset.

b. requires recognition of an asset if the excess fair value of plan assets exceeds the corridor amount.

c. recommends recognition of an asset but does not require such recognition.

d. does not permit recognition of an asset.

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Answers (1)

Know the Answer?

Lily Yoder · Answer 1

a. requires recognition of an asset.

Explanation:

If the fair value of plan assets exceeds the projected benefit obligation of the plan, an asset is recognized equal to the net overfunded projected benefit obligation.