Stereo Warehouse is a US retailer that offers employees a defined benefit pension plan as part of its compensation package. Stereo Warehouse prepares its financial statements in accordance with US GAAP. The following information is extracted from the company’s regulatory filings regarding the pension plan assumptions.

Assumptions used for Stereo Warehouse’s Defined Benefit Plan
2016	2015	2014
Expected long-term rate of return on plan assets	6.06%	6.14%	6.79%
Discount rate	4.85%	4.94%	5.38%

Compared to the actual 2016 reported financial statements, if Stereo Warehouse had used the same expected long-term rate of return on plan assets assumption in 2016 as it used in 2014, its projected pension benefit obligations at the end of 2016 would most likely have been:

A. lower.

B. higher.

C. the same.

Answer rating: 100% (QA)

Answer is A lower In the given case rate of return is higher in 201... View the full answer