Detailed Answer
Answer (C) is correct.
Service cost is the actuarial present value of benefits attributed by the
pension benefit formula to services rendered during the accounting
period. It is a component of the projected benefit obligation (PBO). The
PBO as of a date is equal to the actuarial present value of all benefits
attributed by the pension benefit formula to employee service rendered
prior to that date. The PBO is measured using assumptions as to future
salary levels.