plan for an employee. Annual payments under the pensionJessabel Company has established a defined benefit pensionplan are equal to the employee's highest lifetime salaryThe employee is expected to retire in 5 years and the salarymultiplied by 3% multiplied by number of years with theOn December 31, 2020, the employee had worked for JessabeProblem 17-10 (IAA)entity.Company for 15 years. The current salary is P500,000increases are expected to average 4% per year during thperiod.The employee is expected to live for 6 years after retirineand will receive the first annual pension payment one yeaafter retirement. The discount rate is 12%.Future value of 1 at 4% for 5 periodsPV of an ordinary annuity of 1 at 12% for 6 periodsPV of 1 at 12% for 5 periods1.2174.1110.567What is the projected benefit obligation on December 31,2020?a. 638,269,b. 225,000c. 524,460d. 608,500

A projected benefit obligation (PBO) seems to be an actuarial calculation of how much money a…

plan for an employee. Annual payments under the pension plan are equal to the employee's highest lifetime salary pension pension multinlied by 3% multiplied by number of years with the Problem 17-10 multinlied by 3% multiplied by number of years with

plan for an employee. Annual payments under the pension plan are equal to the employee's highest lifetime salary pension pension multinlied by 3% multiplied by number of years with the Problem 17-10 multinlied by 3% multiplied by number of years with

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

plan for an employee. Annual payments under the pension
Jessabel Company has established a defined benefit pension
plan are equal to the employee's highest lifetime salary
The employee is expected to retire in 5 years and the salary
multiplied by 3% multiplied by number of years with the
On December 31, 2020, the employee had worked for Jessabe
Problem 17-10 (IAA)
entity.
Company for 15 years. The current salary is P500,000
increases are expected to average 4% per year during th
period.
The employee is expected to live for 6 years after retirine
and will receive the first annual pension payment one yea
after retirement. The discount rate is 12%.
Future value of 1 at 4% for 5 periods
PV of an ordinary annuity of 1 at 12% for 6 periods
PV of 1 at 12% for 5 periods
1.217
4.111
0.567
What is the projected benefit obligation on December 31,
2020?
a. 638,269,
b. 225,000
c. 524,460
d. 608,500

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