At January 1, 2016, Wembley Company had plan assets of €250,000 and a defined benefit obligation of the same amount.During 2016, service cost was €27,500, the discount rate was 10%, actual and expected return on plan assets were €25,000, contributions were €20,000, and benefits paid were €17,500.Based on this information what would be the defined benefit obligation for Wembley Company for 2016?

Question

Quizplus · Accepted Answer

The defined benefit obligation is calculated as follows: Starting obligation (€250,000) + service cost (€27,500) + interest cost (10% of €250,000 = €25,000) - benefits paid (€17,500) = €285,000.

At January 1, 2016, Wembley Company Had Plan Assets of €250,000