The Following Information Is Related to the Postretirement Benefits Plan

question 41

Essay

The following information is related to the postretirement benefits plan of Heerey, Inc. for 2015: $\begin{array}{lr}\text { Service cost } & \$ 280,000 \\\text { Discount rate } & 8 \% \\\text { APBO, January 1, 2015 } & 2,250,000 \\\text { EPBO, January 1, 2015 } & 2,400,000 \\\text { Actual return on plan assets in 2015 } & 104,000\\\text { Expected return on plan assets in } 2015 & 95,600 \\\text { Amortization of PSC, due to benefit increase } & 107,200 \\\text { Contributions (funding) } & 400,000 \\\text { Benefit pavments } & 208,000\end{array}$
Instructions
(a) Compute the amount of postretirement expense for 2015. (Show computations.)(b) Compute the amount of the APBO at December 31, 2015.

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Definitions:

Incentivize

To provide incentives or motivations to encourage specific behaviors or actions.

Accrual

Accrual is an accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Liability

A liability is a company's financial debt or obligation that arises during the course of business operations, listed on the right-hand side of the balance sheet.

Asset

Resources with economic value owned by an individual, corporation, or country, expected to provide future benefits.