INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
9th Edition
ISBN: 9781260180657
Author: SPICELAND
Publisher: MCG
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Chapter 17, Problem 17.30E
(1)
To determine
Other postretirement benefits: The postretirement benefits which are provided by employers, other than pensions, like medical insurance, life insurance, and legal services, and healthcare benefits, are referred to as other postretirement benefits.
Postretirement benefit expense: This is an expense to the employer paid as compensation after the completion of services performed by the employees for the other postretirement benefits.
To determine: Amortization of prior service cost
(2)
To determine
Postretirement benefit expense for 2018
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16. Southeast Technology provides postretirement health care benefits to employees. On January 1, 2021, the following plan-related data were available:
($ in thousands)
Prior service cost—originated in 2016
$
50
Accumulated postretirement benefit obligation
530
Fair value of plan assets
none
Average remaining service period to retirement
20 years (same in previous 10 years)
Average remaining service period to full eligibility
15 years (same in previous 10 years)
On January 1, 2021, 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 2021 is $114,000. Required:1. Complete the below table to calculate the prior service cost…
3
The following data are available pertaining to Firewall Corporation's retiree health plan for 2021:
Number of employees covered
Years employed as of January 1, 2021
Attribution period
EPBO, January 1
EPBQ, December 31
Interest rate
Funding
4
5 (each)
20 years
$112,000
$123,200
10%
none
Required:
1. What is the APBO at the beginning of 2021?
2. What is the interest cost for 2021?
3. What is service cost for 2021?
4. Prepare the journal entry to record the postretirement benefit expense for 2021.
Complete this question by entering your answers in the tabs below.
Req 1 to 3
Req 4
What is the APBO at the beginning, interest cost and service cost for 2021?
1. APBO
2. Interest cost
3. Service cost
Req 1 to 3
Req 4
>
NOTE 17: EMPLOYEE BENEFIT PLANS (in part)
($ in millions)
Changes in projected benefit obligation:
Obligation at beginning of period
Service cost
Interest cost
Pension Benefits
2020
2019
$ 648
1
$ 637
1
31
34
Actuarial (gain) loss
Benefits paid
Obligation at end of period
Change in plan assets:
54
37
(50)
(50)
$ 684
$ 659
Fair value of plan assets at beginning of period
Actual return (loss) on plan assets*
$ 496
$ 431
70
52
Employer contribution
24
74
Benefits paid
(50)
(50)
Fair value of plan assets at end of period
540
507
Net liability recognized at end of period
$ (144)
$ (152)
*Expected return $30 and $29 in 2020 and 2019, respectively
Required:
1. What amount did Maur report in its balance sheet related to the pension plan at June 30, 2020?
2. When calculating pension expense at June 30, Maur included $10 million in its income statement as the amortization of
unrecognized net actuarial loss (net loss-AOCI). This AOCI account had a balance of $350 million at the beginning of the…
Chapter 17 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
Ch. 17 - Prob. 17.1QCh. 17 - Prob. 17.2QCh. 17 - Prob. 17.3QCh. 17 - What is the vested benefit obligation?Ch. 17 - Prob. 17.5QCh. 17 - Prob. 17.6QCh. 17 - Name three events that might change the balance of...Ch. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - Prob. 17.10Q
Ch. 17 - The return on plan assets is the increase in plan...Ch. 17 - Define prior service cost. How is it reported in...Ch. 17 - Prob. 17.13QCh. 17 - Is a companys PBO reported in the balance sheet?...Ch. 17 - What two components of pension expense may be...Ch. 17 - Prob. 17.16QCh. 17 - Evaluate this statement: The excess of the actual...Ch. 17 - Prob. 17.18QCh. 17 - TFC Inc. revises its estimate of future salary...Ch. 17 - Prob. 17.20QCh. 17 - Prob. 17.21QCh. 17 - Prob. 17.22QCh. 17 - The components of postretirement benefit expense...Ch. 17 - The EPBO for Branch Industries at the end of 2018...Ch. 17 - Prob. 17.25QCh. 17 - Prob. 17.26QCh. 17 - Prob. 17.1BECh. 17 - Prob. 17.2BECh. 17 - Prob. 17.3BECh. 17 - Prob. 17.4BECh. 17 - Prob. 17.5BECh. 17 - Prob. 17.6BECh. 17 - Prob. 17.7BECh. 17 - Prob. 17.8BECh. 17 - Prob. 17.9BECh. 17 - Prob. 17.10BECh. 17 - Net gain LO176 The projected benefit obligation...Ch. 17 - Prob. 17.12BECh. 17 - Prob. 17.13BECh. 17 - Postretirement benefits; determine the APBO and...Ch. 17 - Prob. 17.15BECh. 17 - Prob. 17.1ECh. 17 - Prob. 17.2ECh. 17 - Prob. 17.3ECh. 17 - Prob. 17.4ECh. 17 - Prob. 17.5ECh. 17 - Prob. 17.6ECh. 17 - Prob. 17.7ECh. 17 - Prob. 17.8ECh. 17 - Prob. 17.9ECh. 17 - Prob. 17.10ECh. 17 - Prob. 17.11ECh. 17 - PBO calculations; ABO calculations; present value...Ch. 17 - Prob. 17.13ECh. 17 - Prob. 17.14ECh. 17 - Prob. 17.15ECh. 17 - Prob. 17.16ECh. 17 - Prob. 17.17ECh. 17 - Prob. 17.18ECh. 17 - Prob. 17.19ECh. 17 - Prob. 17.20ECh. 17 - Prob. 17.21ECh. 17 - Prob. 17.22ECh. 17 - Prob. 17.23ECh. 17 - Prob. 17.24ECh. 17 - Prob. 17.25ECh. 17 - Prob. 17.26ECh. 17 - Prob. 17.27ECh. 17 - Prob. 17.28ECh. 17 - Prob. 17.29ECh. 17 - Prob. 17.30ECh. 17 - Prob. 17.31ECh. 17 - Prob. 17.32ECh. 17 - Prob. 17.33ECh. 17 - Prob. 17.1PCh. 17 - PBO calculations; present value concepts LO173...Ch. 17 - Service cost, interest, and PBO calculations;...Ch. 17 - Prob. 17.4PCh. 17 - Prob. 17.5PCh. 17 - Prob. 17.6PCh. 17 - Determining the amortization of net gain LO176...Ch. 17 - Prob. 17.8PCh. 17 - Prob. 17.9PCh. 17 - Prob. 17.10PCh. 17 - Prob. 17.11PCh. 17 - Prob. 17.12PCh. 17 - Prob. 17.13PCh. 17 - Prob. 17.14PCh. 17 - Prob. 17.15PCh. 17 - Prob. 17.16PCh. 17 - Prob. 17.17PCh. 17 - Prob. 17.18PCh. 17 - Prob. 17.19PCh. 17 - Prob. 17.20PCh. 17 - Prob. 17.21PCh. 17 - Prob. 17.1BYPCh. 17 - Prob. 17.2BYPCh. 17 - Prob. 17.3BYPCh. 17 - Prob. 17.5BYPCh. 17 - Prob. 17.6BYPCh. 17 - Prob. 17.7BYPCh. 17 - Prob. 17.8BYPCh. 17 - Prob. 17.9BYPCh. 17 - Prob. 17.11BYPCh. 17 - Prob. 1CCTCCh. 17 - Prob. 1CCIFRS
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- 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.arrow_forward14. The following data are available pertaining to Household Appliance Company's retiree health care plan for 2021: Number of employees covered 2 Years employed as of January 1, 2021 3 [each] Attribution period 25 years Expected postretirement benefit obligation, Jan. 1 $ 50,000 Expected postretirement benefit obligation, Dec. 31 $ 53,000 Interest rate 6 % 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.arrow_forwardProblem 17-6 (Algo) Determine the PBO; plan assets; pension expense; two years (LO17-3, 17-4, 17-6] Stanley-Morgan Industries adopted a defined benefit pension plan on April 12, 2021. The provisions of the plan were not made retroactive to prior years. A local bank, engaged as trustee for the plan assets, expects plan assets to earn a 10% rate of return. The actual return was also 10% in 2021 and 2022.* A consulting firm, engaged as actuary, recommends 5% as the appropriate discount rate. The service cost is $140,000 for 2021 and $220,000 for 2022. Year-end funding is $150,000 for 2021 and $160,000 for 2022. No assumptions or estimates were revised during 2021. * We assume the estimated return was based on the actual return on similar investments at the inception of the plan and that, since the estimate didn't change, that also was the actual rate in 2022. Required: Calculate each of the following amounts as of both December 31, 2021, and December 31, 2022: (Enter your answers in…arrow_forward
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