Question

XYZ company received the PBO report from the actuary with the following information:

PBO (end of 2018): $110,000;
benefits paid to retirees (during 2018): $10,000;
interest cost (during 2018): $8,000;
the discount rate applied: 10%.

Required:
What was the service cost for 2018?

Answer 1

$32,000

Step-by-step explanation:

XYZ company

Service cost

Ending PB0 $110,000

Less: Beginning PBO $80,000 ($8,000/10%)

Interest Cost $8,000

$22,000

Add: Benefits paid $10,000

Service cost $32,000

Hence, the service cost for XYZ Company in 2018 is $32,000