Question

Fox Co. maintains a defined benefit pension plan for its employees. For the fiscal year ended December 31 of the current year, it reported a pension liability. This liability is the amount by which the ________.

Answer 1

Liability is the amount through which the projected benefit obligation is greater than the fair value of the plan assets.

Step-by-step explanation:

Defined benefit pension plan is the plan which the company used for the pension payments of employees and are calculated or evaluated as per the length of the service as well as the salary, which employees earned during the time of retirement.

The liability in defined pension plan is the liability which the increase the each period through an equal amount to the expense as the company does not fund the other post retirement benefit plan.

And if the projected benefit obligation exceed the fair value of the plan assets of pension, then the prepaid or accrued pension cost is recorded as the liability.