Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2015. As of the end of 2016, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $72,000. Each of the employees will become fully eligible for benefits after 28 more years of service but aren’t expected to retire for 35 more years. The interest rate is 6%. Required: 1. What is the expected postretirement benefit obligation at the end of 2016? 2. What is the accumulated postretirement benefit obligation at the end of 2016? 3. What is the expected postretirement benefit obligation at the end of 2017? 4. What is the accumulated postretirement benefit obligation at the end of 2017?
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been
with the firm since its inception at the beginning of 2015. As of the end of 2016, the actuary estimates the total
net cost of providing health care benefits to employees during their retirement years to have a present value of
$72,000. Each of the employees will become fully eligible for benefits after 28 more years of service but aren’t
expected to retire for 35 more years. The interest rate is 6%. Required:
1. What is the expected postretirement benefit obligation at the end of 2016?
2. What is the accumulated postretirement benefit obligation at the end of 2016?
3. What is the expected postretirement benefit obligation at the end of 2017?
4. What is the accumulated postretirement benefit obligation at the end of 2017?
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