Henry Has a Defined Benefit Plan That Promises an Annual

question 158

Multiple Choice

Henry has a defined benefit plan that promises an annual retirement benefit based on the average of his last five years of salary times 2.5 times years of service.At retirement Henry has 21 years of service and an average salary over the last 5 years of $95,000.What will his annual benefit be?

• A) $95,000
• B) $60,500
• C) $49,875
• D) $28,500
• E) cannot determine

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Definitions:

Going Concern Assumption

An accounting principle that assumes a company will continue to operate and remain solvent for the foreseeable future, affecting its financial reporting.

Operating Indefinitely

A business condition where it is expected that the company will continue its operations without a foreseeable end.

Future Benefits

Expected economic advantages gained from current investments, actions, or decisions.

Business

An organization or enterprise engaged in commercial, industrial, or professional activities with the aim of generating profits.