Question

On January 1, 2021, Stenson Co. has the following balances: Projected benefit obligation $11,200,000 Fair value of plan assets 10,000,000 The settlement rate is 10%. Other data related to the pension plan for 2021 are: Service costs $640,000 Amortization of prior service costs due to increase in benefits 144,000 Contributions 720,000 Benefits paid 670,000 Actual return on plan assets 704,000 Amortization of net gain 48,000 The balance of the projected benefit obligation at December 31, 2021 is:

Answer 1

$12,290,000

Step by Step Explanation:

Step 1

Projected benefit obligation $11,200,000

Add; Service cost $640,000

Total $11,840,000

Step 2

Projected benefit obligation( $11,200,000× 0.10) $1,120,000

Less Benefits paid 670,000

Total $450,000

Therefore:

$11,840,000+$450,000= $12,290,000

The balance of the projected benefit obligation at December 31, 2021 is: $12,290,000