The Margie Company has a defined benefit pension plan for its employees.The following information pertains to the pension plan as of December 31, 2010: $\begin{array}{ll}
\text { Projected benefit obligation, January 1, } 2010 & \$ 1,600,000 \
\text { Service cost, } 2010 & 750,000 \
\text { Interest cost, 2010 } & 100,000 \
\text { Payments to retired employees } & 80,000 \
\text { Actual return on plan assets } & 99,600
\end{array}$
The amount of the December 31, 2010, pension benefit obligation is

Question

The Margie Company has a defined benefit pension plan for its employees.The following information pertains to the pension plan as of December 31, 2010: $\begin{array}{ll}
\text { Projected benefit obligation, January 1, } 2010 & \$ 1,600,000 \
\text { Service cost, } 2010 & 750,000 \
\text { Interest cost, 2010 } & 100,000 \
\text { Payments to retired employees } & 80,000 \
\text { Actual return on plan assets } & 99,600
\end{array}$
 The amount of the December 31, 2010, pension benefit obligation is

Quizplus · Accepted Answer

The pension benefit obligation as of December 31, 2010, is calculated by adding the service cost and interest cost to the beginning projected benefit obligation, then subtracting the payments to retired employees. This gives: $1,600,000 + $750,000 + $100,000 - $80,000 = $2,370,000. The actual return on plan assets does not affect the pension benefit obligation directly.

The Margie Company Has a Defined Benefit Pension Plan for Its