The following is the only information pertaining to kane co.âs defined benefit pension plan: pension asset, january 1, year 1 $ 2,000service cost 19,000interest cost 38,000actual and expected return on plan assets 22,000amortization of prior service cost arising in a prior period 52,000employer contributions 40,000in its december 31, year 1, balance sheet, what amount should kane report as the unfunded or overfunded projected benefit obligation () $ 7,000 overfunded.(b) $15,000 underfunded.(c) $45,000 underfunded.(d) $52,000 underfunded.

option (a) is correct answer '$ 7,000 overfunded'

Explanation:

Data:

Pension asset, January 1, Year 1 = $ 2,000

Service cost = $ 19,000

Interest cost = $ 38,000

Actual and expected return on plan assets = $ 22,000

Amortization of prior service cost arising in a prior period = $ 52,000

Employer contributions = $ 40,000

Total expenses = Service cost + Interest cost = $ 19,000 + $ 38,000  

= $ 57000

Now,

projected benefit obligation (PBO) = (Pension asset + Actual and expected return ) - Total expenses

or

projected benefit obligation (PBO)

= $ 2,000 + $ 22,000 + $ 40,000 - $ 57000

or

overfunded projected benefit obligation (PBO) = $ 7,000

hence,

option (a) is correct answer '$ 7,000 overfunded'

answer; i believe the correct answer is (a) purchase of treasury stock;

i believe it’s b because the rest don’t make sense