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14 August, 11:42

The following information relates to Sand Company's defined benefit pension plan at December 31, the end of the reporting period. PBO: $5 million; plan assets: $5.8 million. On its balance sheet, Sand should show

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  1. 14 August, 15:06
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    A net pension asset of $800,000

    Explanation:

    A benefit pension plan can be defined as a pension plan in which the employer of the person agreed or promise to pay a lump sum of money on the retirement of the person from active service and it often depend on the employee's earnings history, how long the person has been in service as well as the person age.

    Sand Company's

    Plan assets: $5.8 million - PBO: $5 million

    =$800,000

    Therefore on its balance sheet, Sand should show a net pension of asset of $800,000

    which is the present value of the flow of the person pension benefits.
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