A company has pension plan assets with a fair value of $9 million.The accumulated benefit obligation for pensions is $10 million and the projected benefit obligation for pensions is $15 million.What pension liability is reported on the balance sheet?
A)$1 million
B)$6 million
C)$10 million
D)$15 million

Question

Quizplus · Accepted Answer

The balance sheet will report the pension liability based on the projected benefit obligation. As the projected benefit obligation is higher than the fair value of pension assets, a liability of $6 million will be reported on the balance sheet.

A Company Has Pension Plan Assets with a Fair Value