Lender Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current calendar year, the following plan - related data were available. APBO balance $ 159,000,000 Fair value of plan assets none Average remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $29,000,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $49,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year.

Lender Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current calendar year, the following plan - related data were available. APBO balance $ 159,000,000 Fair value of plan assets none Average remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $29,000,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $49,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter19: Accounting For Post Retirement Benefits

Section: Chapter Questions

Problem 11RE

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Lender Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current calendar year, the following plan-related data were available. APBO balance Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility Postretirement Benefit Expense Service cost Interest cost Return on plan assets Amortization of prior service cost Postretirement benefit expense On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $11,000,000. Management chooses to amortize this amount on a straight- line basis. The service cost is $31,000,000. The appropriate interest rate is 10%. ($ in millions) Required: Calculate the postretirement benefit expense for the current year. Note: Enter your answers in millions rounded to 2…
Lender company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current year, the following plan related data we’re available. APBO balance 157 million FV plan assets 0 Average remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years On jan1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by 27 million. Management chooses to amortize this amount on a straight line basis. The service cost is 47 million. The interest rate =10% Calculate the postretirement expense for the current year Average
Oberon Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current year, the following plan-related data were available. Net loss–postretirement benefit plan $ 10,760,000 APBO balance $ 104,800,000 Fair value of plan assets none Average remaining service period to retirement 20 years Average remaining service period to full eligibility 15 years On January 1 of the current year, Oberon amended the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $11,250,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $68,000,000. The appropriate interest rate is 10%. Required:Calculate the postretirement benefit expense for the current year.
Oberon Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current year, the following plan-related data were available. Net loss-postretirement benefit plan APBO balance Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility $ 10,440,000 $103,200,000 none 20 years 15 years On January 1 of the current year, Oberon amended the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $8,850,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $52,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year. (Round your answers to the nearest thousands of dollars.) ($ in thousands) Service cost Interest cost Return on plan assets $ 52,000…
Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 12 years of service and reach age 62 while in service. On January 1, 2016, the following plan-related data were available: ($ in millions) Accumulated postretirement benefit obligation $130 Fair value of plan assets none Average remaining service period to retirement 25 years (same in previous 10 yrs.) Average remaining service period to full eligibility 20 years (same in previous 10 yrs.) On January 1, 2016, 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 $20 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2016 is $34 million. The interest rate is 8%. Required: 1. Calculate the postretirement benefit expense for 2016. 2. Prepare the journal entry to record the…
Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 12 years of service and reach age 62 while in service. On January 1, 2024, the following plan-related data were available: Accumulated postretirement benefit obligation Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility ($ in millions) $ 130 None 25 years (same in previous 10 years) 20 years (same in previous 10 years) On January 1, 2024, 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 $20 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2024 is $38 million. The interest rate is 9%. Required: 1. Calculate the postretirement benefit expense for 2024. 2. Prepare the journal entry to record the…
On January 1, 2019, Fun Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, the company retroactively gives credit to the date of hire for each employee. The following information is available about the plan: Service cost $31,550 Accumulated postretirement benefit obligation (1/1/19) 114,000 Expected return on plan assets 0 Amortization of Prior service cost 11,400 Payments to retired employees during 2019 5,530 Interest rate 10% Average remaining service period of active plan participants (1/1/19) 10 years Required: 1. Compute the OPRB expense for 2019 if the company uses the average remaining service life to amortize the prior service cost. 2. Prepare all the required journal entries for 2019 if the plan is not funded.
The following data are for Guava Company's retiree health care plan for the current calendar year. Number of employees covered Years employed as of January 1 Attribution period EPBO, January 1 EPBO, December 31 Interest rate Funding and plan assets None What is the service cost to be included in the current year's postretirement benefit expense? O $3,200. $4,000. 5 4(each) 20years O $3,180. O $3,000. $ 60,000 $ 63,600 6%
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Southeast Technology provides postretirement health care benefits to employees. On January 1, 2016, the following plan-related data were available: ($ in 000s) Prior service cost—originated in 2011 $ 50 Accumulated postretirement benefit obligation 530 Fair value of plan assets none Average remaining service period to retirement 20 years (same in previous 10 yrs.) Average remaining service period to full eligibility 15 years (same in previous 10 yrs.) On January 1, 2016, Southeast amends the plan in response to spiraling health care costs. The amendment establishes an annual maximum of $3,000 for medical benefits that the plan will provide. The actuary determines that the effect of this amendment is to decrease the APBO by $80,000. Management amortizes prior service cost on a straight-line basis. The interest rate is 8%. The service cost for 2016 is $114,000. Required: 1. Calculate the prior service cost amortization for 2016. 2. Calculate the postretirement benefit expense for 2016.
Riverrun Co. provides medical care and insurance benefits to its retirees. In the current year, Riverrun agrees to pay $5,500 for medical insurance and contribute an additional $9,000 to a retirement program. Record the entry for these accrued (but unpaid) benefits on December 31.
15. Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 12 years of service and reach age 62 while in service. On January 1, 2021, the following plan-related data were available: ($ in millions) Accumulated postretirement benefit obligation $ 130 Fair value of plan assets None Average remaining service period to retirement 25 years (same in previous 10 yrs.) Average remaining service period to full eligibility 20 years (same 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 $20 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2021 is $34 million. The interest rate is 8%. Required:1. Calculate the postretirement benefit expense for 2021.2. Prepare the…