Refer to Exhibit 20-3.What is the correct amount of the projected benefit obligation as of December 31, 2011?

A) $ 200, 000
B) $ 493, 378
C) $1, 205, 178
D) $1, 845, 178

Question

Refer to Exhibit 20-3.What is the correct amount of the projected benefit obligation as of December 31, 2011?A) $ 200, 000B) $ 493, 378C) $1, 205, 178D) $1, 845, 178

nitesh thakur · Accepted Answer

Final Answer : D, Explanation :  The projected benefit obligation (PBO) as of December 31, 2011, can be calculated by considering the initial PBO, service costs, interest costs, and amortization of the unrecognized prior service cost. The initial PBO is $1,351,800. For 2010, add the service cost of $95,000 and interest (10% of $1,351,800 = $135,180), and subtract the amortization of the unrecognized prior service cost ($135,180). For 2011, add the service cost of $105,000, interest (10% of the adjusted PBO from 2010), and subtract the amortization of the unrecognized prior service cost again. The calculation shows the PBO growing each year due to these additions and subtractions, leading to the correct answer of $1,845,178.

Refer to Exhibit 20-3.What is the correct amount of the projected benefit obligation as of December 31, 2011?

A) $ 200, 000
B) $ 493, 378
C) $1, 205, 178
D) $1, 845, 178

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