In short
A defined benefit plan's funded status is the fair value of plan assets minus the projected benefit obligation. An overfunded plan is reported as an asset and an underfunded plan as a liability.
Key takeaways
- It is measured as of the fiscal year-end.
- Changes not included in net periodic pension cost go to other comprehensive income.
- For other postretirement benefits, the accumulated postretirement benefit obligation is used.
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
A defined benefit plan has plan assets with a fair value of $8,000,000 and a projected benefit obligation of $9,500,000. How is this reported on the balance sheet?