While doing some online research concerning a possible investment you come across an article that mentions in passing that a representative of Morgan Stanley had indicated that a company's pension plan had benefited its reported earnings. Curiosity piqued, you seek your old Intermediate Accounting text.
Required:
1. Can the net periodic pension "cost" cause a company's reported earnings to increase? Explain.
2. Companies must report the actuarial assumptions used to make estimates concerning pension plans. Which estimate influences the earnings effect in requirement 1? Can any of the other estimates influence earnings? Explain.