Question

The following information for Blossom Enterprises is given below: December 31, 2021 Assets and obligations Plan assets (at fair value) $552000 Accumulated benefit obligation 1060000 Projected benefit obligation 1150000 Other Items Pension asset / liability, January 1, 2021 28000 Contributions 340000 Accumulated other comprehensive loss 453700 There were no actuarial gains or losses at January 1, 2021. The average remaining service life of employees is 10 years. What is the amount that Blossom Enterprises should report as its pension liability on its balance sheet as of December 31, 2021

Answer 1

Answer: $598,000

Step-by-step explanation:

The Pension liability to be reported is the amount that is owed to the employees (projected benefit obligation) less the amount that is available in order to be able to pay this obligation ( plan assets at fair value).

Pension Liability = Projected benefit obligation - Plan assets at fair value

= 1,150,000 - 552,000

= $598,000