The actuarial valuation and accounting for defined benefit pension plans involves a number of different estimates. For
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The actuarial valuation and accounting for defined benefit pension plans involves a number of different estimates. For each of the following changes in assumptions, identify the likely effect on the indicated items at the end of the current year (increase, decrease, or no effect). Assume that the sponsor’s balance sheet has a net defined benefit pension asset.
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Change in assumption a. Increase expected return on assets b. Increase interest rate on pension obligations c. Increase life expectancy of employees/retirees d. Increase age of retirement when employees become eligible for retirement benefits e. Increase rate of wage increase when pension benefits are specified relative to employees' wages Defined benefit pension asset
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