Question

Carla Vista Corporation received the following report from its actuary at the end of the year:

December 31, 2020 December 31, 2021
Projected benefit obligation $3760000 $4150000
Accumulated benefit obligation 2355000 2715000
Fair value of pension plan assets 2515000 2635000

The amount reported as the pension liability at December 31, 2020 is:

a) $1405000. b) $150000. c) $1245000. d) $0.

Answer 1

$1,245,000

Step-by-step explanation:

The computation of the amount reported as the pension liability is shown below:

= Ending balance of Projected benefit obligation - Fair value of pension plan assets

= $3,760,000 - $2,515,000

= $1,245,000

We simply deduct the fair value from the ending balance of projected benefit obligation that the amount reported could be come