Question

Selected financial information for Knox Company for the current year ended December 31 is shown below.

Plan assets at January 1                                            $2,300,000

Projected benefit obligation at January 1                     2,000,000

Accumulated benefit obligation at January 1                 1,600,000

Interest cost                                                                  160,000

Service cost                                                                 280,000

Actual return on plan assets                                          250,000

Expected return on plan assets                                      200,000

Employer’s contribution                                                 320,000

Benefits paid to retirees                                                 120,000

Accrued pension cost at January 1                                        -0-

Knox’s projected benefit obligation at December 31 is ?

Answer 1

The projected obligation benefit is how much amount the company will need now to meets its future liability of pension.

Amount of the projected obligation calculated as follows(how the amount is derived can be seen in second formula sheet of the excel)

Porjected benefit obligation on 31st december for Knox is $ 23,20,000

Calcuation is as follows