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Learning Objective $17-03$ Describe the five events that might change the balance of the PBO.

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The PBO can change due to the accumulation of service cost from year to year, the accrual of interest as time passes, making plan amendments retroactive to prior years $($prior service cost$),$ and periodic adjustments when estimates change $($gains and losses$).$ The obligation is reduced as benefits actually are paid to retired employees.

Changes in the PBO: Payment of Retirement Benefits

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The payment of benefits to retirees during the current year

the PBO as of the end of the year.