Question

Gerhard Company sponsors a defined benefit pension plan. At the end of the current fiscal year, the related pension plan assets have a fair value of $2 million, the ABO is $1.5 million, and the PBO is $2.2 million. Gerhard's pension plan is

Answer 1

$200,000 underfunded

Step-by-step explanation:

Calculation for Gerhard's pension plan

Using this formula

Pension plan =Fair value -PBO

Let plug in the formula

Pension plan=$2 million-$2.2 million

Pension plan=$200,000 Underfunded

Therefore Gerhard's pension plan is Underfunded by the amount of $200,000