- CFA Exams
- CFA Level I Exam
- Topic 4. Financial Statement Analysis
- Learning Module 8. Topics in Long-Term Liabilities and Equity
- Subject 5. Financial Reporting for Post-Employment and Share-Based Compensation Plans
CFA Practice Question
The Colorado Copper Company sponsors a defined benefit pension plan. The following information pertains to that plan:
Service cost for 2015: $36 million
Retiree benefits paid (end of year): $30 million
Discount rate: 10%
Projected benefit obligation on Jan. 1, 2015: $144 million
Service cost for 2015: $36 million
Retiree benefits paid (end of year): $30 million
Discount rate: 10%
No change in actuarial estimates occurred during 2015. What is CCC's projected benefit obligation on December 31, 2015?
Correct Answer: $164.4 million
Beginning balance ($144) + service cost ($36) + interest expense ($144 x 10%) - benefits paid ($30) [in millions]
User Contributed Comments 1
| User | Comment |
|---|---|
| quanttrader | projected PBO = initial PBO + svc costs + int costs (initial PBO X rate) - payouts |