The following data are available pertaining to Household Appliance Company's retiree health care plan for 2021: Number of employees covered 3 Years employed as of January 1, 2021 2[each]Attribution period 25yearsExpected postretirement benefit obligation, Jan. 1$54,000 Expected postretirement benefit obligation, Dec. 31$56,700 Interest rate 5%Funding none Required:1. What is the accumulated postretirement benefit obligation at the beginning of 2021?2. What is interest cost to be included in 2021 postretirement benefit expense?3. What is service cost to be included in 2021 postretirement benefit expense?4. Prepare the journal entry to record the postretirement benefit expense for 2021.

Accumulated benefit obligation (ABO) is an approximate amount of a company’s pension plan liability…

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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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The following data are available pertaining to Household Appliance Company's retiree health care plan for 2021:


Number of employees covered		3
Years employed as of January 1, 2021		2	[each]
Attribution period		25	years
Expected postretirement benefit obligation, Jan. 1	$	54,000
Expected postretirement benefit obligation, Dec. 31	$	56,700
Interest rate		5	%
Funding		none

Required:
1. What is the accumulated postretirement benefit obligation at the beginning of 2021?
2. What is interest cost to be included in 2021 postretirement benefit expense?
3. What is service cost to be included in 2021 postretirement benefit expense?
4. Prepare the journal entry to record the postretirement benefit expense for 2021.

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