A company has an underfunded defined benefit pension plan. During the current year, the company uses the years-of-service method to amortize its prior service cost. What effect will the amortization of prior service cost have on the company's current-year financial statements?
A.Total liabilities will be decreased.
B.Net income will be increased.
C.Current-period expenses will be decreased.
D.Other comprehensive income will be increased.
I understand why D is correct but I don't understand why B isn't correct? When OCI is debited then we amortize the prior service cost which is an expense resulted in increased net income. Isn't correct?
REG: 77 x2
BEC: 81 x3
FAR: 68 retake 10/1
AUD: 8/27
.