A Company's Defined-Benefit Pension Plan Had a Projected Benefit Obligation

A company's defined-benefit pension plan had a projected benefit obligation (PBO) of $380,000 on January 1, Year 1. During Year 1, pension benefits paid were $70,000. The settlement rate for the plan for Year 1 was 12%. Service cost for the year was $109,000. Plan assets (fair value) increased during the year by $50,000. What was the PBO at December 31, Year 1?

A) $310,000
B) $425,600
C) $489,000
D) $464,600

Correct Answer:

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