Question

ABC Corporation has provided the following information regarding their defined benefit pension plan for the year 2018:

Current service cost $ 235,000
Contribution to the plan 262,500
Past service cost, effective December 31, 2018 50,000
Actual return on plan assets 160,000
Benefits paid 100,000
Net defined benefit liability at January 1, 2018 400,000
Plan assets at January 1, 2018 1,600,000
Defined benefit obligation at January 1, 2018 2,000,000
Interest/discount rate on the DBO and plan assets 10%

Required:

1) Calculate the defined benefit obligation ending balance **Show detailed breakdown of calculation**

Answer 1

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Answers is highlighted in yellow: Solution: 1) Defined benefit obligation at January 1, 2018 2000000 235000 Service Cost Interest Expense (2000000*10%) Past service cost, effective December 31, 2018 200000 50000 Less: Benefits paid 100000 Defined benefit obligation ending balance 2385000