Calculate the OPRB expense of Company V for the year 2016; assume that the company uses the average remaining service life to amortize the prior service cost.

Question

On January 1, 2019, Lee Software Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, Lee retroactively gives credit to the date of hire for each employee. The service cost for 2019 is $8,130. The plan is not funded, and the discount rate is 9%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $6,950 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $73,520 and $40,160, respectively. Additional information on January 1, 2019, is as follows: Employee Status Age Expected Retirement Age Accumulated Postretirement Benefit Obligation 1. Employee 31 65 $9,900 2. Employee 55 65 88,800 3. Retired 67 — 44,400 $143,100 Required: 1. Compute the OPRB expense for 2019 if Lee uses the average remaining service life to amortize the prior service cost. 2.…

Answer 1

Question

Chapter 19, Problem 12P

1.

To determine

Calculate the OPRB expense of Company V for the year 2016; assume that the company uses the average remaining service life to amortize the prior service cost.

2.

To determine

Prepare necessary journal entries of Company V for 2016.

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On January 1, 2019, Lee Software Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, Lee retroactively gives credit to the date of hire for each employee. The service cost for 2019 is $8,130. The plan is not funded, and the discount rate is 9%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $6,950 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $73,520 and $40,160, respectively. Additional information on January 1, 2019, is as follows: Employee Status Age Expected Retirement Age Accumulated Postretirement Benefit Obligation 1. Employee 31 65 $9,900 2. Employee 55 65 88,800 3. Retired 67 — 44,400 $143,100 Required: 1. Compute the OPRB expense for 2019 if Lee uses the average remaining service life to amortize the prior service cost. 2.…

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