2. The accumulated benefit obligation measures
A. The pension obligation on the basis of the plan formula applied to years of service to date and based on existing salary levels.
B. The pension obligation on the basis of the plan formula applied to years of service to date and based on future salary levels.
C. An estimated total benefit at retirement and then computes the level cost that will be sufficient, together with interest expected to accumulate at the assumed rate, to provide the total benefits at retirement.
D. The shortest possible period for funding to maximize the tax deduction.
3. On January 1, 2008, Nen Co. has the following balances:
Projected benefit obligation $4,200,000
Fair value of plan assets 3,750,000
The settlement rate is 10%. Other data related to the pension plan for 2008 are:
Service cost $240,000
Amortization of unrecognized prior service costs 54,000
Benefits paid 225,000
Actual return on plan assets 264,000
Amortization of unrecognized net gain 18,000
The fair value of plan assets at December 31, 2008 is
2. A. The pension obligation on the basis of the plan formula applied to years of ...
The solution explains some questions relating to pension accounting