How to Calculate the Funded Status of a Pension Plan

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

A pension fund calculates $100 million in assets and $75 million in projected benefit obligation (PBO). What is the financial statement impact?

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1. A defined benefit pension plan specifies which of these?

2. Which of these creates a liability on the balance sheet?

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About This Quiz & Worksheet

The funded status of a pension plan requires some calculation. These questions will test how much you know about related topics like the financial statement impact in a sample problem and a defined benefit pension plan.

Quiz & Worksheet Goals

You'll need to know about these points:

  • Balance sheet liability
  • The end of period projected benefit obligation in a pension plan
  • Value of the end of period fund assets in a sample problem

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about how to calculate the funded status of a pension
  • Information recall - access the knowledge you've gained regarding what creates balance sheet liabilities
  • Making connections - use your understanding of defined benefit pension plans to recognize what they do and do not specify

Additional Learning

For further insight into the way pension plans work, you can view the lesson called How to Calculate the Funded Status of a Pension Plan. The following topics will be explored:

  • Explanation of a defined benefit pension plan
  • The fair value of plan assets
  • Cost of plan assets with examples
  • Pension benefit obligations
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