Definition of Accumulated Benefit Obligation


Accumulated benefit obligation is defined as an obligation which measures the company’s pension plan ability. It also refers that the pension plan is to be abolish on the dot, it does not consider any future salary increases.


It is an important point to be noticed for the investors to looking over a company’s pension accounting. Pension accounting is an area aggressive in many ways i-e the discount rate used for future pension obligations the idea of accumulated benefit obligations (ABO) is differ from the projected benefit obligation, which conclude that the pension plan is advancing thus account for future salary increases.

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