Hey Monkeys,
Quick question on the effect of a change in assumptions example for pension accounting. The question asks you to recalculate the closing obligation for Year 1 using the information from Scenario 4 above it due to a 1% increase in the discount rate. I understand the Current Year amount, the interest and opening obligation but am stuck on the prior years calcuation.
In the scenario, it is €103,570.94 but the answer clearly has changed the prior years calculation to €95,661.69. Why is this so for a 1% future increase in discount rate and how is it calculated exactly?
Thank you in advance for your assistance!