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.
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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 |
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