Answer:
option (a) is correct answer '$ 7,000 overfunded'
Explanation:
Data:
Pension asset, January 1, Year 1 = $ 2,000
Service cost = $ 19,000
Interest cost = $ 38,000
Actual and expected return on plan assets = $ 22,000
Amortization of prior service cost arising in a prior period = $ 52,000
Employer contributions = $ 40,000
Total expenses = Service cost + Interest cost = $ 19,000 + $ 38,000
= $ 57000
Now,
projected benefit obligation (PBO) = (Pension asset + Actual and expected return ) - Total expenses
or
projected benefit obligation (PBO)
= $ 2,000 + $ 22,000 + $ 40,000 - $ 57000
or
overfunded projected benefit obligation (PBO) = $ 7,000
hence,
option (a) is correct answer '$ 7,000 overfunded'
