On January 1, 2016, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2016, retiree benefits paid were $3 million. Service cost for 2016 is $7 million. Assumptions regarding the trend of future health care costs were revised at the end of 2016, 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, 2016.

On January 1, 2016, Medical Transport Company’s accumulated postretirement benefit obligation was $25 million. At the end of 2016, retiree benefits paid were $3 million. Service cost for 2016 is $7 million. Assumptions regarding the trend of future health care costs were revised at the end of 2016, 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, 2016.

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 11RE

See similar textbooks

Similar questions

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.
At January 1, 2017, Wembley Company had plan assets of $250,000 and a defined benefit obligation of the same amount. During 2017, service cost was $27,500, the discount rate was 10%, actual return on plan assets was $25,000, contributions were $20,000, and benefits paid were $17,500. Based on this information, what would be the defined benefit obligation for Wembley Company at December 31, 2017?
Cahal-Michael Company has a postretirement health care benefit plan. On January 1, 2016, the following planrelated data were available: ($ 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.
At January 1, 2017, Hennein Company had plan assets of $280,000 and a projected benefit obligation of the same amount. During 2017, service cost was $27,500, the settlement rate was 10%, actual and expected return on plan assets were $25,000, contributions were $20,000, and benefits paid were $17,500. Prepare a pension worksheet for Hennein Company for 2017.
At January 1, 2017, Wembley Company had plan assets of $250,000 and a defined benefit obligation of the same amount. During 2017, service cost was $27,500, the discount rate was 10%, actual return on plan assets was $25,000, contributions were $20,000, and benefits paid were $17,500. Based on thisinformation, what would be the defined benefit obligation for Wembley Company at December 31, 2017?(a) $277,500. (c) $27,500.(b) $285,000. (d) $302,500.
Classified Electronics has an unfunded retiree health care plan. Each of the company’s three employees has been with the firm since its inception at the beginning of 2015. As of the end of 2016, the actuary estimates the total net cost of providing health care benefits to employees during their retirement years to have a present value of $72,000. Each of the employees will become fully eligible for benefits after 28 more years of service but aren’t expected to retire for 35 more years. The interest rate is 6%. Required: 1. What is the expected postretirement benefit obligation at the end of 2016? 2. What is the accumulated postretirement benefit obligation at the end of 2016? 3. What is the expected postretirement benefit obligation at the end of 2017? 4. What is the accumulated postretirement benefit obligation at the end of 2017?
Manno Corporation has the following information available concerning its postretirement benefit plan for 2017. Service cost $40,000 Interest cost 47,400 Actual and expected return on plan assets 26,900 Compute Manno’s 2017 postretirement expense.
The following represents the aging of contributions receivable for McKenzie Health Foundation for the historical years ended June 30, 2020, 2019, 2018, 2017, 2016, and 2015. Contributions receivable vary significantly by year; however, contribution revenue has been fairly stable over the five-year period. Fiscal Year-End 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 Total contributions receivable $1,003,900 $1,225,650 $913,550 $1,907,700 $625,800 $483,750 Allowance for uncollectible contributions 31,689 40,100 29,327 68,870 21,903 19,530 Total contribution revenue 20,066,850 20,960,895 19,094,525 21,011,340 20,879,860 20,571,300 Aging of contributions receivable 0–30 days $546,000 $394,800 $457,800 $1,547,700 $625,800 $456,750 31–60 days 23,400 383,400 261,000 360,000 0 27,000 61–90 days 389,500 447,450 194,750 0 0 0 >90 days 45,000 0 0 0 0 0 $1,003,900 $1,225,650 $913,550 $1,907,700 $625,800 $483,750 a) Prepare a report…
Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist. As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts.…
Hollenbeck Foods Inc. sponsors a postretirement medical and dental benefit plan for its employees. The following balances relate to this plan on January 1, 2020. Plan assets $200,000 Expected postretirement benefit obligation 820,000 Accumulated postretirement benefit obligation 200,000 No prior service costs or OCI balances exist As a result of the plan's operation during 2020, the following additional data are provided by the actuary. Service cost is $70,000 Discount rate is 10% Contributions to plan are $65,000 Expected return on plan assets is $10,000 Actual return on plan assets is $15,000 Benefits paid to employees are $44,000 Average remaining service to full eligibility: 20 years Instructions: a. Using the preceding data, compute the net periodic postretirement benefit cost for 2020 by preparing a worksheet that shows the journal entry for postretirement expense and the year-end balances in the related postretirement benefit memo accounts.…
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.
The following information for Cooper Enterprises is given below: December 31, 2015 Assets and obligations Plan assets (at fair value) $400,000 Accumulated benefit obligation 640,000 Projected benefit obligation 700,000 Other Items Pension asset / liability, January 1, 2015 20,000 Contributions 250,000 Accumulated other comprehensive loss 335,800 There were no actuarial gains or losses at January 1, 2015. The average remaining service life of employees is 12 years. What is the pension expense that Cooper Enterprises should report for 2015? 414,200 What is the amount that Cooper Enterprises should report as its pension liability on its balance sheet as of December 31, 2015? $60,000 $640,000 $300,000 $700,000 The amortization of Other Comprehensive Loss for 2016 is: $0 $15,580 $22,150 $33,580