Analysts reporting on companies will pay close attention to the disclosures regarding pension benefits. Key points include all of the following except:
A. because of high assumed discount rates, most pension plans have remained underfunded with funding ratios ranging between 69% and 86% since 2008.
B. to help analysts determine whether fund assets are large enough to satisfy currently anticipated pension benefit payouts, FASB ASC Topic 715 requires firms to provide a table that lists the dollar benefits expected to be paid in each of the ensuing five years and in the aggregate for the five years thereafter.
C. while companies with overfunded plans can suspend funding for long periods and use the cash for other operating purposes, underfunded plans may reflect past and continuing cash flow difficulties.
D. the common rule of thumb is that a 1% decrease in discount rate would increase PBO by 17.0% whereas a 1% increase would decrease it by 14.5%.
Answer: A
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