[NinaSun]

The employer net pension liability for the Golf City Fire Department increased by $200,000 from Year 1 to Year 2 as a result of a change in the formula used to compute benefits for retiring firemen. The change includes $150,000 of cost attributable to prior service. As a result of this change, Golf City will display the following on their Year 2 government-wide financial statements:

a. Deferred outflow of resources of $50,000

b. Deferred outflow of resources of $150,000

c. Deferred inflows of resources of $50,000

d. Pension expense of $200,000

The answer is “a”. My answer is “b”. The question does not clarify whether the cost of prior service is been earned or not. So I think the $150,000 can be either deferred outflow or expenditure. We dont know what the other $50,000 attribute to, so it is not necessarily deferred outflow. Can anyone give explanation to justify the answer? Thanks

AUD-74,75 11/2014
REG-80 04/2015
FAR-74, 91 11/2015
BEC-79 08/2015