NM Aviation Fuel has a pension plan for its employees. NM's pension plan has an accumulated benefit obligation of $3,000,000. This means that NM would have to pay $3,000,000 now if the company had to settle the plan's pension liability today. To offset this. NM has invested in a pension fund that holds investments in stocks, bonds, and real estate.

a. The market value of the investments held by NM's pension fund is $2.400.000. Is the pension plan overfunded or underfunded? How much pension liability should NM report on its balance sheet?

b. Assume instead that the market value of the investments in NM's pension fund is $3,500,000. Is the pension plan overfunded or underfunded? How much pension liability should NM report on its balance sheet?