Accounting Mystery Tip

Let us assume you need to calculate the PBO (Projection Benefit Obligation). You are given the following information being: 

• Benefits Paid To Employees (or Trustees)
• Service Cost
• Pesnion Plan Assets 
• Discount Rate of 5%
• Of course, the beginning PBO Balance

Therefore, you need to: 

• PBO Balance + 
• Service Cost +
• Interest Cost (Discount Rate * Beginning PBO Balance) -
• Benefits Paid to Employees = 
• Ending PBO (Notice Pension Plan Assets were not part of the formula)