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8 January, 06:10

Pearsall Company's defined benefit pension plan had a PBO of $268,000 on January 1, 2021. During 2021, pension benefits paid were $47,000. The discount rate for the plan for this year was 10%. Service cost for 2021 was $86,000. Plan assets (fair value) increased during the year by $54,000. The amount of the PBO at December 31, 2021, was:

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  1. 8 January, 07:45
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    The amount of the PBO at December 31, 2021, was $333800

    Explanation:

    The amount of PBO at december 31st is calculated as follows:

    PBO on jan 1, 2021 = $268000

    add: Service cost = $86000

    add: interest = $26800

    less: pension benefits that have been paid = $47000

    now, we have to solve the above calculation

    we get, PBO at dev 31 = $333800

    Note: interest is calculated by multiplying the PBO amount on Jan 1,2021 with the rate of interest given.

    Thus, $268000 multiply 10% = $26800
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