Ask Question
21 July, 02:04

The following is the only information pertaining to Kane Co.âs defined benefit pension plan:Pension asset, January 1, Year 1 $ 2,000Service cost 19,000Interest cost 38,000Actual and expected return on plan assets 22,000Amortization of prior service cost arising in a prior period 52,000Employer contributions 40,000In its December 31, Year 1, balance sheet, what amount should Kane report as the unfunded or overfunded projected benefit obligation (PBO) ? (A) $ 7,000 overfunded. (B) $15,000 underfunded. (C) $45,000 underfunded. (D) $52,000 underfunded.

+2
Answers (1)
  1. 21 July, 02:20
    0
    option (a) is correct answer '$ 7,000 overfunded'

    Explanation:

    dа ta:

    Pension asset, January 1, Year 1 = $ 2,000

    Service cost = $ 19,000

    Interest cost = $ 38,000

    Actual and expected return on plan assets = $ 22,000

    Amortization of prior service cost arising in a prior period = $ 52,000

    Employer contributions = $ 40,000

    Total expenses = Service cost + Interest cost = $ 19,000 + $ 38,000

    = $ 57000

    Now,

    projected benefit obligation (PBO) = (Pension asset + Actual and expected return) - Total expenses

    or

    projected benefit obligation (PBO)

    = $ 2,000 + $ 22,000 + $ 40,000 - $ 57000

    or

    overfunded projected benefit obligation (PBO) = $ 7,000

    hence,

    option (a) is correct answer '$ 7,000 overfunded'
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The following is the only information pertaining to Kane Co.âs defined benefit pension plan:Pension asset, January 1, Year 1 $ 2,000Service ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers