question archive A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2016
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A company's defined benefit pension plan had a PBO of $265,000 on January 1, 2016. During 2016, pension benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service cost for 2016 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of the PBO at December 31, 2016, was:
A. $225,000.
B. $305,000.
C. $331,500.
D. None of these answer choices is correct.
PBO/1/1 (Credit Balance) |
$265,000 |
Service cost (Credit) |
80,000 |
Settlement cost ($265,000 × 10%) (Credit) |
26,500 |
Benefits paid (Debit) |
(40,000) |
PBO 12/31 |
$331,500 |