Mary Abbott is a long-time employee of Love Enterprises, a manufacturer and distributor of farm implements. Abbott
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Love Enterprises sponsors a defined benefit pension plan. It provides for an annual pension benefit equal to 60% of the employee’s annual salary at retirement. Payments commence on the employee’s 66th birthday or one year after the anniversary date of his or her retirement.
The discount and earnings rate on plan assets is 8%. The average life expectancy for male and female employees is 76 and 80, respectively.
Required:
1. Compute the PBO related to Abbott’s pension benefits as of January 1, 2014.
2. Compute the ABO for the year ended December 31, 2014.
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Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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