The funded status of a defined benefit pension plan is equal to the

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Quizplus · Accepted Answer

The funded status of a defined benefit pension plan is the difference between the projected benefit obligation (PBO) and the fair value of the pension plan assets. The PBO is the present value of the benefits that employees have earned to date using projected future salary levels. Therefore, option C is the correct answer. Option A is incorrect because it uses the vested benefit obligation, which only includes benefits that employees are entitled to if they leave the company before retirement. Option B is incorrect because it uses the accumulated benefit obligation, which is similar to the vested benefit obligation but includes all benefits that employees are entitled to regardless of whether they leave the company or retire. Option D is incorrect because it includes employer contributions, which should not be included in the calculation of the funded status.

The Funded Status of a Defined Benefit Pension Plan Is