144k views
1 vote
A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2018. During 2018, pension benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service cost for 2018 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of the PBO at December 31, 2018, was:

1 Answer

3 votes

Answer:

$331,500

Step-by-step explanation:

The computation of the ending balance of the pension benefit obligation is shown below:

= Opening balance of PBO + service cost + interest cost - pension benefits

= $265,000 + $80,000 + $26,500 - $40,000

= $331,500

The computation of the interest cost is shown below:

= Opening balance of PBO × discount rate

= $265,000 × 10%

= $26,500

The increased value of the plan assets would be ignored.

User Ptkato
by
8.6k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.