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Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 20X1, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate-for purposes of determining postretirement obligations and expenses-is 8%. Jones does not prefund postretirement benefits, so there are no plan assets. It created a $45 million prior service cost credit at the end of 20X0 when the company modified the health care plan to reduce the maximum benefits paid to each employee. This amount is being amortized over 15 years. The service cost component of postretirement benefits for 20X1 is $35 million. Required: 1. Determine the amount of postretirement benefits cost for 20X1. 2. If benefits paid to retirees totaled $64 million in 20X1, determine the balance in the Accumulated postretirement benefit obligation account on December 31, 20X1. (For all requirements, enter your answers in millions of dollars and not in dollars (e.g. $3,000,000 should be entered as $3).) X Answer is complete but not entirely correct. Amount $64,000,000 1. Net postretirement expense 2. Accumulated postretirement benefit obligation $ 295,000,000

Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 20X1, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate-for purposes of determining postretirement obligations and expenses-is 8%. Jones does not prefund postretirement benefits, so there are no plan assets. It created a $45 million prior service cost credit at the end of 20X0 when the company modified the health care plan to reduce the maximum benefits paid to each employee. This amount is being amortized over 15 years. The service cost component of postretirement benefits for 20X1 is $35 million. Required: 1. Determine the amount of postretirement benefits cost for 20X1. 2. If benefits paid to retirees totaled $64 million in 20X1, determine the balance in the Accumulated postretirement benefit obligation account on December 31, 20X1. (For all requirements, enter your answers in millions of dollars and not in dollars (e.g. $3,000,000 should be entered as $3).) X Answer is complete but not entirely correct. Amount $64,000,000 1. Net postretirement expense 2. Accumulated postretirement benefit obligation $ 295,000,000

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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Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 20X1, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate-for purposes of determining postretirement obligations and expenses-is 8%. Jones does not prefund postretirement benefits, so there are no plan assets. It created a $45 million prior service cost credit at the end of 20X0 when the company modified the health care plan to reduce the maximum benefits paid to each employee. This amount is being amortized over 15 years. The service cost component of postretirement benefits for 20X1 is $35 million. Required: 1. Determine the amount of postretirement benefits cost for 20X1. 2. If benefits paid to retirees totaled $64 million in 20X1, determine the balance in the Accumulated postretirement benefit obligation account on December 31, 20X1. (For all requirements, enter your answers in millions of dollars and not in dollars (e.g. $3,000,000 should be entered as $3).) X Answer is complete but not entirely correct. Amount $64,000,000 X 1. Net postretirement expense 2. Accumulated postretirement benefit obligation $ 295,000,000
Transcribed Image Text:Jones Company has a postretirement benefit (health care) plan for its employees. On January 1, 20X1, the balance in the Accumulated postretirement benefit obligation account was $300 million. The assumed discount rate-for purposes of determining postretirement obligations and expenses-is 8%. Jones does not prefund postretirement benefits, so there are no plan assets. It created a $45 million prior service cost credit at the end of 20X0 when the company modified the health care plan to reduce the maximum benefits paid to each employee. This amount is being amortized over 15 years. The service cost component of postretirement benefits for 20X1 is $35 million. Required: 1. Determine the amount of postretirement benefits cost for 20X1. 2. If benefits paid to retirees totaled $64 million in 20X1, determine the balance in the Accumulated postretirement benefit obligation account on December 31, 20X1. (For all requirements, enter your answers in millions of dollars and not in dollars (e.g. $3,000,000 should be entered as $3).) X Answer is complete but not entirely correct. Amount $64,000,000 X 1. Net postretirement expense 2. Accumulated postretirement benefit obligation $ 295,000,000
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