chaojimali

expected return on plan assets does not do anything for the Plan assets Balance sheet account. Only Actual return on Plan Assets affects Plan assets on the Balance sheet.

Reported Pension Expense = Service Cost + Interest Cost - Expected Return on Plan assets.

And Reported Pension Expense is deducted from Revenues while arriving at Net Income.

When Exp. Return on Plan assets goes up -> Reported Pension expense Reduces -> which increases Net Income....

so that is the right answer.

CP