At December 31, 2020, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary forMallory at the end of 2021 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:Multiple ChoiceA debit to APBO and a credit to Loss-OCI.A debit to Postretirement benefit expense and a credit to APBO.A debit to Loss-OCl and a credit to APBO.A debit to Postretirement benefit expense and a credit to Loss-OCI.15 of 39Next >Sy PrevQuestion no...pages5...pdfQuestion no....pagesMacBook Air...

Loss-Other Comprehensive Income (OCI) is debited and Accumulated Post Benefit Obligation (APBO) is…

At December 31, 2020, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary for Mallory at the end of 2021 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:

At December 31, 2020, Mallory, Inc. reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan. The actuary for Mallory at the end of 2021 increased her estimate of future health care costs. Mallory's entry to record the effect of this change will include:

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 7E

See similar textbooks

Similar questions

At December 31, 2015, Johnston and Johnston reported in its balance sheet as part of accumulated other comprehensive income a net loss of $37 million related to its postretirement benefit plan. The actuary for J&J increased her estimate of J&J’s future health care costs at the end of 2016. J&J’s entry to record the effect of this change will include a. a debit to other comprehensive income and a credit to postretirement benefit liability. b. a debit to postretirement benefit liability and a credit to other comprehensive income. c. a debit to pension expense and a credit to postretirement benefit liability. d. a debit to pension expense and a credit to other comprehensive income.
On January 1, 2021, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2021, retiree benefits paid were $3 million. Service cost for 2021 is $7 million. Assumptions regarding the trend of future health care costs were revised at the end of 2021, causing the actuary to revise downward the estimate of the APBO by $1 million. The actuary’s discount rate is 8%. Determine the amount of the accumulated postretirement benefit obligation at December 31, 2021.
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.
Under Cura Hospital’s established rate structure, patient service revenues of $9,000,000 would have been earned for the year ended December 31, 2019. However, only $6,750,000 was collected because of charity allowances of $1,500,000 and discounts of $750,000 to third-party payors. For the year ended December 31, 2019, what amount should Cura record as net patient service revenues? a. $6,750,000 b. $7,500,000 c. $8,250,000 d. $9,000,000
The following selected events relate to the 2019 activities of Fall Nursing Home, Inc., a not-for-profit agency:a. Gross patient service revenue totaled $2,200,000. The provision for uncollectible accounts was estimated at $92,000. The allowance for contractual adjustments was increased by $120,000.b. After a conference with representatives of Gold Star Insurance Company, differences between the amounts accrued and subsequent settlements reduced receivables by $60,000.c. A grateful patient donated securities with a cost of $30,000 and a fair value at date of donation of $75,000. The donation was restricted to expenditure for modernization of equipment. The donation was accepted.d. Cash of $45,000 that had been restricted by a donor for the purchase of furniture was used this year. Fall chose to release the donor restriction over the useful life of the asset.e. The board voluntarily transferred $50,000 of cash to add to the resources held for capital improvements.f. Pledges of $60,000…
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.…
On January 1, 2019, Vasby Software Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, Vasby retroactively gives credit to the date of hire for each employee. The service cost for 2019 is $8,510. 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 $7,190 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $82,590 and $40,630, respectively. Additional information on January 1, 2019, is as follows: Employee Status Age Expected Retirement Age Accumulated Postretirement Benefit Obligation 1. Employee 31 65 $18,000 2. Employee 55 65 68,400 3. Retired 67 — 42,300 $128,700 Required: 1. Compute the OPRB expense for 2019 if Vasby uses the average remaining service life to amortize the prior service cost.…
On January 1, 2018, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2018, retiree benefits paid were $3 million. Service cost for 2018 is $7 million. Assumptionsregarding the trend of future health care costs were revised at the end of 2018, causing the actuary to revisedownward the estimate of the APBO by $1 million. The actuary’s discount rate is 8%. Determine the amount ofthe accumulated postretirement benefit obligation at December 31, 2018.
Southeast Technology provides postretirement health care benefits to employees. On January 1, 2016, the following plan-related data were available: ($ 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.
On December 31, 2019, Tyre Corporation received the DBO report from the actuary. The following information was included in the report: ending DBO, $1,100,000; benefits paid to retirees, $100,000; interest cost, $80,000. The discount rate applied by the actuary was 8%. There was no actuarial revaluation required nor any past service cost. What was the service cost for the year? Select one: a. $20,000. b. $920,000. c. $180,000. d. $120,000. e. None of the above.
On January 1, 2019, Vasby software company adapted a healthcare plan for its retired employees. To determine eligibility for benefits, Westby retroactively gives credit to the date of hire for each employee. The service cost for 2019 is $8420. The plan is not funded, and the discount rate is 8%. All employees were hired at age 28 and became eligible for full benefits at age 58. Employees he was paid $7390 for post retirement healthcare benefits in 2019. On December 31, 2019, the accumulated post retirement benefit obligation for employees B and see were $76,320 and $41,020 respectively. Additional information on January 1, 2019 is as follows: employee A- age 31- expected retirement age 65- accumulated post retirement benefit obligation $9,000. employee B- age 55- expected retirement age 65- accumulated post retirement benefit obligation $78,600. employee C- age 67- expected retirement age --- accumulated post retirement benefit obligation $45,900. total accumulated post retirement…
Cahal-Michael Company has a postretirement health care benefit plan. On January 1, 2016, the following planrelated data were available: ($ in 000s) Net loss–AOCI $ 336 Accumulated postretirement benefit obligation 2,800 Fair value of plan assets 500 Average remaining service period to retirement 14 years (same in previous 10 yrs.) The rate of return on plan assets during 2016 was 10%, although it was expected to be 9%. The actuary revised assumptions regarding the APBO at the end of the year, resulting in a $39,000 increase in the estimate of that obligation. Required: 1. Calculate any amortization of the net loss that should be included as a component of postretirement benefit expense for 2016. 2. Assume the postretirement benefit expense for 2016, not including the amortization of the net loss component, is $212,000. What is the expense for the year? 3. Determine the net loss or gain as of December 31, 2016.