Guys, having trouble understanding this statement from page 110 from book 2:
Increasing the expected return on plan assets (under GAAP) will:
*Reduce pension expense
*Not affect the benefit obligation or the funded status of the plan.
Comment: So I get the first bullet but I don’t quite get the second. The formula for funded status is:
Fair value of plan assets - PBO = funded status
If you increase the expected return on plan assets, shouldn’t that affect the fair value of the plan assets, and thus affect the funded status?
Need help here.