Question

The Shasti Corporation reported the following for the year ending December 31, 20X1: Service cost: $142,610 Plan assets, January 1, 20X1: $1,200,000 Prior service cost amortization: $21,150 Expected return on plan assets: 9% Actual return on plan assets: 8.5% Pension expense: $175,760 Actuarially determined discount rate: 8% What was the projected benefit obligation on January 1, 20X1

Answer 1

$1,500,000

Step-by-step explanation:

Calculation to determine What was the projected benefit obligation on January 1, 20X1

Using this formula

Projected benefit obligation on January 1, 20X1=Interest cost ÷Actuarially determined discount rate

Projected benefit obligation on January 1, 20X1=(10%*$1,200,000)/0.08

Projected benefit obligation on January 1, 20X1=$120,000/0.08

Projected benefit obligation on January 1, 20X1=$1,500,000

Therefore the projected benefit obligation on January 1, 20X1 is $1,500,000