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Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 13 years of service and reach age 63 while in service. On January 1, 2021, the following plan-related data were available: Accumulated postretirement benefit obligation Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility (5 in millions) $ 145 None 25 years (sane in previous 10 yrs.) 20 years (sane in previous 10 yrs.) On January 1, 2021, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $30 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2021 is $41 million. The interest rate is 6%. Required: 1. Calculate the postretirement benefit expense for 2021. 2. Prepare the journal entry to record the expense.

Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 13 years of service and reach age 63 while in service. On January 1, 2021, the following plan-related data were available: Accumulated postretirement benefit obligation Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility (5 in millions) $ 145 None 25 years (sane in previous 10 yrs.) 20 years (sane in previous 10 yrs.) On January 1, 2021, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $30 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2021 is $41 million. The interest rate is 6%. Required: 1. Calculate the postretirement benefit expense for 2021. 2. Prepare the journal entry to record the expense.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 13 years of service and reach age 63 while in service. On January 1, 2021, the following plan-related data were available: Accumulated postretirement benefit obligation Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility Required: 1. Calculate the postretirement benefit expense for 2021. 2. Prepare the journal entry to record the expense. On January 1, 2021, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $30 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2021 is $41 million. The interest rate is 6%. Complete this question by entering your answers in the tabs below. Journal entry worksheet Required 1 Required 2 Prepare the journal entry to record the expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) View transaction list 1 Record the expense. Note: Enter debits before credits. Event 1 General Journal Postretirement benefit expense Amortization of prior service cost-OCI Record entry Clear entry < Required 1 Debit 53.0 Credit 25 years (same in previous 18 yrs.) 28 years (sane in previous 18 yrs.) 1.5 ($ in millions) $ 145 None View general Journal Required 2 >
Transcribed Image Text:Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 13 years of service and reach age 63 while in service. On January 1, 2021, the following plan-related data were available: Accumulated postretirement benefit obligation Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility Required: 1. Calculate the postretirement benefit expense for 2021. 2. Prepare the journal entry to record the expense. On January 1, 2021, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $30 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2021 is $41 million. The interest rate is 6%. Complete this question by entering your answers in the tabs below. Journal entry worksheet Required 1 Required 2 Prepare the journal entry to record the expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) View transaction list 1 Record the expense. Note: Enter debits before credits. Event 1 General Journal Postretirement benefit expense Amortization of prior service cost-OCI Record entry Clear entry < Required 1 Debit 53.0 Credit 25 years (same in previous 18 yrs.) 28 years (sane in previous 18 yrs.) 1.5 ($ in millions) $ 145 None View general Journal Required 2 >
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