Question

Information regarding the defined-benefit pension plan of pauline products included the following for 2016 ($ in millions): no contributions were made to the pension plan assets during 2016. at december 31, 2016, what amount should hall report as its net pension liability?

a) $10 million
b) $25 million
c) $27 million
d) $35 million

Answer 1

To calculate the net pension liability, the fair value of pension plan assets is subtracted from the projected pension obligations. The question's details are incomplete to determine the net pension liability for Pauline Products. In general, underfunding pensions can lead to penalties and requires increased transparency for employees.

option a is the correct

Step-by-step explanation:

The question asks about the calculation of a net pension liability for a company's defined-benefit pension plan. Defined-benefit pension plans are corporate pension plans where retirees receive a fixed nominal dollar amount per year, which can pose issues due to inflation over time.

To calculate the net pension liability, one would typically subtract the fair value of pension plan assets from the present value of projected pension obligations.

However, the information needed to calculate the net pension liability (such as the fair value of plan assets or pension obligations) is not provided within the question or the supplementary information.

Therefore, it is impossible to determine the correct amount of net pension liability for Pauline Products for the year 2016. Moreover, there could be a typographical error in the question as it incorrectly mentions 'Hall' instead of Pauline Products when asking what amount should be reported as the net pension liability.

It is important for firms to adequately fund their pension plans, as underfunding can lead to penalties and financial implications. Likewise, providing employees with transparent information about their pension accounts is essential.