Skipped Measuring the Pension Obligation eBcok The Projected Benefits Obligation

Question

Skipped Measuring the Pension Obligation eBcok The Projected Benefits Obligation Changes as a Result of Cause Effect Frequency Service cost +Each period Each period (except the first period of the plan, when no obligation exists to accrue interest) References Not recognized as liability in company's balance sheet Project benefit Lishility nevertheless 1x Knowledge Check 01 Triblock Industries has a defined benefit pension plan. Using a discount rate of 6%, the actuary estimated the company's projected benefit obligation (PBO) to be $278,343 and $309,796 at the beginning and end of the current year, respectively. The pension plan has not been amended and there were no revisions to the estimates used to derive the PBO. What portion of the current year's increase in the PBO is attributable to service (that is, the service cost component of pension cost) during the current year? ervice cost

Explanation / Answer

1.

Projected benefit obligation at the end of the year=$309.796

Present value=$ 309.796/1.06

(As discount rate is 6%)

=$292.260

Thus, service costs=$292.260-$278.343

=$13.917

2.

Pension expense= service costs +interest costs- expected return on plan assets + amortization of prior service costs+or- amortization of gains/loss

=$44000+$50000-$31000+$5000

=$68000

=$68 millions

(There is no gain/loss on actuarial revaluations)

Pls give your feedback!! Happy Learning :)

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