Determination of Projected Benefit Obligation
Response to the following problem:
Several years ago, the Lewad Company established a defined benefit pension plan for its employees. The following information is available for 2010 in regard to its pension plan:
(1) discount rate, 10%;
(2) service cost, $142,000;
(3) plan assets (1/1), $659,000; and
(4) expected return on plan assets, $65,900.
There is no amortization of prior service cost, and there is no gain or loss. On December 31, 2010, the company contributed $143,000 to the pension plan, resulting in a credit to Accrued/Prepaid Pension Cost of $8,200.
Required:
Compute the amount of Lewad Company's projected benefit obligation on January 1, 2010.