sagnik2422
Mar 19, 2014, 08:35 AM
Louie Company has a defined benefit pension plan. On December 31 (the end of the fiscal year), the company received the PBO report from the actuary. The following information was included in the report: ending PBO, $110,000; benefits paid to retirees, $10,000; interest cost, $8,000. The discount rate applied by the actuary was 8%. What was the service cost for the year? Answer was $12,000 but I don't get how.
My work: I set up the PBO T Chart with 110,000 ending balance on credit side and interest cost of 8,000 on credit side, and benefits paid of 10,000 on debit side but I can't seem to work the numbers to get $12,000.
Please show how to solve with steps.
Thanks
My work: I set up the PBO T Chart with 110,000 ending balance on credit side and interest cost of 8,000 on credit side, and benefits paid of 10,000 on debit side but I can't seem to work the numbers to get $12,000.
Please show how to solve with steps.
Thanks