Simple Computation of the Net Pension Asset or Liability
On January 1 of Year 1, the company had a projected benefit obligation (PBO) of $10,000 and a pension fund with a fair value of $9,200. There was no unrecognized prior service cost, nor were there deferred pension gains or losses. The following information relates to the pension plan during the yea
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Service cost
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$1,200
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Actual return on the pension fund
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$250
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Benefits paid to retirees
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$100
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Contribution to the pension fund
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$1,050
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Discount rate for PBO
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9%
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Expected return on pension fund
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10%
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Compute (1) the pension-related amount that should be reported on the company's balance sheet on January 1 of Year 1, (2) the PBO as of December 31, and (3) the fair value of the pension fund as of December 31.