Question

Data for 2021 were as follows: PBO, January 1, $240,000 and December 31, $270,000; pension plan assets (fair value) January 1, $180,000, and December 31, $230,000. The projected benefit obligation was underfunded at the end of 2021 by:

Answer 1

The projected benefit obligation was underfunded at the end of 2021 by: $40,000

Solution:

Given,

PBO, January 1, $240,000

December 31, $270,000

pension plan assets (fair value) January 1, $180,000

December 31, $230,000

Now ,

The projected benefit obligation was underfunded at the end of 2021 by :

PBO ($270,000)

Plan assets 230,000

Funded status ($40,000) [ $270,000 - 230,000 ]

∴ The projected benefit obligation was underfunded at the end of 2021 by: $40,000