C IS CORRECT. THE ECONOMIC PENSION EXPENSE REPRESENTS THE TRUE COST...

6. - CFA 2018 LEVEL 2 FRA QUESTION BANK EMPLOYEE COMPENSATION QBANK
CFA 2018 LEVEL 2 FRA QUESTION BANK EMPLOYEE COMPENSATION QBANK
6. C is correct. The economic pension expense represents the true cost of the pension. The reported pension expense is irrelevant in this case. Since the economic pension expense ($1.2 million) exceeds the contributions ($1.0 million), the $200,000 difference can be viewed as a source of borrowing.