A company's defined benefit pension plan had a projected benefit obligation (PBO)of $350,000 on January 1,Year 1.During Year 1,pension benefits paid were $60,000,The discount rate for the plan for Year 1 was 11%.Service cost for the year was $90,000.Plan assets (fair value)increased during the year by $50,000.What was the PBO at December 31,Year 1?

Question

Quizplus · Accepted Answer

The PBO at the end of the year is calculated as: Beginning PBO + Service Cost + Interest Cost - Benefits Paid. Interest Cost = Beginning PBO * Discount Rate = $350,000 * 11% = $38,500. Therefore, PBO at December 31, Year 1 = $350,000 + $90,000 + $38,500 - $60,000 = $418,500.

A Company's Defined Benefit Pension Plan Had a Projected Benefit