问题

问题如下：

Compared to the reported 20X3 financial statements, if Terra Mercado had used the same discount rate it used in 20X1, it would have most likely reported lower:

选项：

net income.

total liabilities.

cash flow from operating activities.

解释：

B is correct. A higher discount rate (5.38% instead of 4.85%) will reduce the present value of the pension obligation (liability). In most cases, a higher discount rate will decrease the interest cost component of the net periodic cost because the decrease in the obligation will more than offset the increase in the discount rate (except if the pension obligation is of short duration). Therefore, periodic pension cost would have been lower and reported net income higher. Cash flow from operating activities should not be affected by the change.