Final answer:
On Hawkins' balance sheet, the Projected Benefit Obligation is listed as a liability and the Plan assets at fair value as assets. There is a pension liability of $600,000, and the Accumulated OCI (PSC) is included in shareholders' equity.
Step-by-step explanation:
On Hawkins Corporation's balance sheet at December 31, 2025, the Projected Benefit Obligation (PBO) of $2,600,000 is listed under liabilities, as it represents the company's pension obligations. The Plan assets at fair value, totaling $2,000,000, are listed under assets. As plan assets are less than the PBO, there is a pension liability to report, calculated by deducting the plan assets from the PBO ($2,600,000 - $2,000,000 = $600,000). The Accumulated Other Comprehensive Income (OCI) reflecting a Prior Service Cost (PSC) of $1,100,000 is part of equity and is presented in the Accumulated Other Comprehensive Income section within shareholders' equity. It represents costs for plan amendments to increase benefits for employee service provided in prior periods. The pension liability and the Accumulated OCI are both reported on the balance sheet but in different sections reflecting the company's financial position.