Question
During the annual audit of JDV, Inc., a publicly traded company, the independent auditor noticed that the companys current-year expected return on plan assets is
During the annual audit of JDV, Inc., a publicly traded company, the independent auditor noticed that the companys current-year expected return on plan assets is much greater than the actual return on plan assets.
The auditor asked the companys controller and actuary to explain the difference. The actuarys answer was that one of the reasons for this situation is that the expected long-term rate of return on plan assets reflects the expected return on current and future years contributions to the pension plan; since future contributions are expected to be greater in the following years, the expected long-term rate of return is greater.
Which section of the authoritative guidance best addresses whether the expected long-term rate of return on plan assets should reflect the long-term expected earnings on future years contributions to the pension plan?
Enter your response in the answer fields below. Guidance on correctly structuring your response appears above and below the answer fields. Unless specifically requested, your response should not cite implementation guidance.
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