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Projected benefit obligation definition

Accounting Tools

What is a Projected Benefit Obligation? A projected benefit obligation (PBO) is the estimated present value of an employee's pension, under the assumption that the employee continues to work for the employer. The projected benefit obligation is only needed when the pension is of the defined benefit variety.

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Accumulated benefit obligation definition

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What is an Accumulated Benefit Obligation? An accumulated benefit obligation is the present value of an employee’s pension, based on the employee’s accumulated work to date. When combined, these two values constitute the total pension obligation of an employer.

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Accounting for pensions

Accounting Tools

Related Courses Accounting for Retirement Benefits How to Account for a Pension The accounting for pensions can be quite complex, especially in regard to defined benefit plans. The Types of Pension Costs There are a number of costs associated with defined benefit plans that may at first appear arcane.

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Vested benefit obligation definition

Accounting Tools

Related Courses Accounting for Retirement Benefits What is a Vested Benefit Obligation? A vested benefit obligation is the actuarial present value of benefits that have been earned by employees.

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Pension benefit obligation definition

Accounting Tools

Related Courses Accounting for Retirement Benefits What is a Pension Benefit Obligation? A pension benefit obligation is the present value of retirement benefits earned by employees. This examination is useful for determining the future payout obligations of a business.

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Prior service cost definition

Accounting Tools

Related Courses Accounting for Retirement Benefits What is Prior Service Cost? Prior service cost is the cost associated with additional benefits that have been granted via an amendment to a pension plan. Related Articles Net Periodic Pension Cost Past Service Cost Projected Benefit Obligation Vested Benefit Obligation

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Minimum pension liability definition

Accounting Tools

Related Courses Accounting for Retirement Benefits What is a Minimum Pension Liability? A minimum pension liability arises when the accumulated benefit obligation for a pension plan is greater than the fair value of the plan's assets.