The following information is based on an actual annual report. Different names and years are being used.Bond and some of its subsidiaries provide certain postretirement medical, dental, and vision care and life insurancefor retirees and their dependents and for the surviving dependents of eligible employees and retirees. Generally,the employees become eligible for postretirement benefits if they retire no earlier than age 55 with 10 years ofservice. The liability for postretirement benefits is funded through trust funds based on actuarially determinedcontributions that consider the amount deductible for income tax purposes. The health care plans are contributory,funded jointly by the companies and the participating retirees. The December 31, 20X2 and 20X1, postretirementbenefit liabilities and related data were determined using the January 1, 20X2, actuarial valuations.Information related to the accumulated postretirement benefit obligation plan for the years 20X2 and 20X1 follows:Years Ended December 31,($ in thousands)Change in benefit obligationBenefit obligation at beginning of period20X220X1$1,236,00041,00082,0004,000(188,000)(51,000)$1,139,00038,00078,0003,00025,000(47,000)Service costInterest costPlan participants' contributionsActuarial loss (gain)Benefits paidSpecial termination benefitsBenefit obligation at end of periodChange in plan assetsFair value of plan assets at beginning of periodActual return on plan assetsEmployer contributionsPlan participants' contributionsBenefits paidFair value of plan assets at period-end27,0001,151,0001,236,000767,000122,00020,0003,000(47,000)865,000(371,000)865,000105,00024,0004,000(51,000)947,000(204,000)Plan assets less than benefit obligationsAOCI-net actuarial (gain) lossAOCI-prior service cost(555,000)41,000(352,000)48,000 The assumed discount rates used to determine the benefit obligation as of December 31, 20X2 and 20X1, were7.75% and 6.75%, respectively. The fair value of plan assets excludes $9 million and $7 million held in a grantor trustas of December 31, 20X2 and 20X1, respectively, for the payment of postretirement medical benefits.The components of other postretirement benefit costs, portions of which were recorded as components ofconstruction costs for the years 20X2, 20X1, and 20XO, follow:($ in thousands)20X220X120X0$ 34,00076,000(61,000)4,000(13,000)Service cost?$?Interest cost on APBO?Expected return on plan assetsAmortization of prior service costsRecognized gain??4,000(14,000)30,0004,000(14,000)Curtailment lossNet periodic benefit cost$?$?$ 40,000The other postretirement benefit curtailment losses in December 20X2 represent the recognition of $3,000 ofadditional prior service costs and a $27,000 increase in the benefit obligations resulting from special terminationbenefits.The health care cost trend rates used to measure the expected cost of the postretirement medical benefits areassumed to be 8.0% for pre-Medicare recipients and 6.0% for Medicare recipients for 20X2. Those rates areassumed to decrease in 0.5% annual increments to 5% for the years 20X5 and 20X4, respectively, and to remainlevel thereafter. The health care cost trend rates, used to measure the expected cost of postretirement dental andvision benefits, are a level 3.5% and 2.0% per year, respectively. Assumed health care cost trend rates have asignificant effect on the amounts reported for the health care plans.Required:1. Assuming an expected rate of return on plan assets for 20X2 and 20X1 of 8.8% and 9%, respectively, computethe missing amounts in the first table and determine the Net periodic benefit cost for years 20X2 and 20X1.2. Assuming that the employer submitted the $4,000,000 of participant contributions directly to the trust, show thejournal entry that Bond would make to record its 20X2 company (employer) contribution, Net periodic benefitcost, and AOCI effects.3. Show that the 20X2 journal entries result in a balance sheet pension asset (liability) equal to the funded status.Assume that the beginning 20X2 balance equals the ending 20X1 funded status.

Given B and its subsidiaries provide some other post-retirement benefits (OPEB) The eligibility of…

The following information is based on an actual annual report. Different names and years are being used. Bond and some of its subsidiaries provide certain postretirement medical, dental, and vision care and life ins for retirees and their dependents and for the surviving dependents of eligible employees and retirees. Gene the employees become eligible for postretirement benefits if they retire no earlier than age 55 with 10 years service. The liability for postretirement benefits is funded through trust funds based on actuarially determine contributions that consider the amount deductible for income tax purposes. The health care plans are contril funded jointly by the companies and the participating retirees. The December 31, 20X2 and 20X1, postretires benefit liabilities and related data were determined using the January 1, 20X2, actuarial valuations. Information related to the accumulated postretirement benefit obligation plan for the years 20X2 and 20X1 f Years Ended Decembe ($ in thousands) Change in benefit obligation 20X2

The following information is based on an actual annual report. Different names and years are being used. Bond and some of its subsidiaries provide certain postretirement medical, dental, and vision care and life ins for retirees and their dependents and for the surviving dependents of eligible employees and retirees. Gene the employees become eligible for postretirement benefits if they retire no earlier than age 55 with 10 years service. The liability for postretirement benefits is funded through trust funds based on actuarially determine contributions that consider the amount deductible for income tax purposes. The health care plans are contril funded jointly by the companies and the participating retirees. The December 31, 20X2 and 20X1, postretires benefit liabilities and related data were determined using the January 1, 20X2, actuarial valuations. Information related to the accumulated postretirement benefit obligation plan for the years 20X2 and 20X1 f Years Ended Decembe ($ in thousands) Change in benefit obligation 20X2

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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