What is Accumulated benefit obligation?
In short
The accumulated benefit obligation is the actuarial present value of pension benefits earned to date, based on employees' current salary levels.
Key takeaways
- The projected benefit obligation uses expected future salaries, so it is equal to or larger than the accumulated benefit obligation.
- Funded status on the balance sheet is based on the projected benefit obligation, not the accumulated one.
- The accumulated benefit obligation is disclosed in the notes.
Where it's tested
BAR: Employee Benefit Plan Accounting — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The projected benefit obligation differs from the accumulated benefit obligation in that the PBO: