Question

On January 1 of the current reporting year, Coda Company's projected benefit obligation was $30 million. During the year, pension benefits paid by the trustee were $4 million. Service cost was $10 million. Pension plan assets earned $5 million as expected. At the end of the year, there was no net gain or loss and no prior service cost. The actuary's discount rate was 10%. Required: Determine the amount of the projected benefit obligation at December 31.

Answer 1

The amount of projected benefit obligation is on Dec 31 is $39 million

Step-by-step explanation:

The computation of the amount of projected benefit obligation is on Dec 31 as follows;

Beginning PBO $30 million

Service cost $10 million

Interest cost (10% × $30) $3 million

Loss (gain) on PBO $0

Less: benefits paid -$4 million

Ending PBO $39 million

Hence, the amount of projected benefit obligation is on Dec 31 is $39 million