Question

The following information relates to a company's defined benefit pension plan at December 31:Accumulated benefit obligation1,035,000Projected benefit obligation1,250,000Prior service cost113,000Net gain on plan assets167,000Plan assets (fair value)737,000What amount should the company report as its pension liability at December 31?A.$567,000B.$513,000C.$400,000D.$352,000

Answer 1

B.$513,000

Step-by-step explanation:

The pension liability of a company as at December 31, is to be calculated in the following manner:

Pension liability=Projected benefit obligation-Plan Assets(fair value)

=1,250,000-737,000

=$513,000

So based on the above discussion, the answer is B.$513,000