Final answer:
The pension asset/liability at December 31, 2025, is computed by subtracting the projected benefit obligation from the plan assets. With a projected benefit obligation of $563,900 and plan assets of $317,800, there is a pension liability of $246,100. Prior service cost is not directly included in this calculation, but it impacts the comprehensive income.
Step-by-step explanation:
To determine the pension asset/liability at December 31, 2025, we must compare the projected benefit obligation (PBO) to the fair value of the plan assets. The PBO reflects the present value of expected future benefits, while plan assets represent the funds set aside to meet these obligations. The formula for calculating pension asset/liability is:
Pension Asset/Liability = Plan Assets - Projected Benefit Obligation
In this scenario, the calculation would be:
Pension Liability = $317,800 (Plan Assets) - $563,900 (Projected Benefit Obligation)
Thus, the pension liability at December 31, 2025 would be:
Pension Liability = $317,800 - $563,900 = -$246,100
Since the result is negative, it indicates a pension liability rather than an asset. The prior service cost of $132,200 in accumulated other comprehensive income is a separate component and does not directly affect the calculation of net pension asset/liability, although it does affect the overall pension expense and other comprehensive income.