The actuarial present value of all the benefits attributed by the pension benefit formula to employee service rendered before a specified date based on expected future compensation levels is the
a. Projected benefit obligation
b. Prior service cost
c. Service cost
d. Accumulated benefit obligation
Items 2, 3, and 4 are based on the following information:
Spath Company adopted a noncontributory defined benefit pension plan on January 1, 2007. Spath Company uses the benefit/years of service method, which results in the following information:
|
2007 |
2008 |
|
|
Service cost |
$300,000 |
$450,000 |
|
Amount funded |
240,000 |
390,000 |
|
Discount rate |
10% |
10% |
|
Expected rate of return |
10% |
10% |
The fair value of the plan assets at the end of each year exceeded the accumulated benefit obligation.