The accumulated benefit obligation approximates the employer's pension liability if the pension plan were terminated and must be shown as a liability on the year-end balance sheet.

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The accumulated benefit obligation (ABO) measures the present value of benefits earned by employees to date, assuming the pension plan is not terminated. It does not have to be shown as a liability on the year-end balance sheet; instead, the Projected Benefit Obligation (PBO) or the Funded Status of the plan is typically reported.

The Accumulated Benefit Obligation Approximates the Employer's Pension Liability If