At a recent board meeting, Elbe’s management disclosed the information concerning the company’s pension plan, based on a recent actuarial revaluation. Elbe also announced it was going to change its policy of deferring actuarial gains and losses and instead recognize them as they arise. Elbe’s management believes this will increase transparency going forward and that the improved disclosure will help the stock price.
before Revaluation after Revaluation
Present value of defined benefit obligation 40,060 45,200
Fair value of plan assets 29,522 29,522
Unrecognized actuarial losses 1,500 4,250
After the actuarial revaluation of the pension plan and the change in accounting policy related to actuarial gains and losses, the net pension liability (in ‘000s) Elbe would report on its statement of financial position will be closest to:
Can anyone explain why the answer is B