The Attribution Approach Required by SFAS 106 for Postretirement Health

question 125

Multiple Choice

The attribution approach required by SFAS 106 for postretirement health care plans is to assign:

• A)An equal fraction of the EPBO to each year the employee is on the company payroll.
• B)An equal fraction of the APBO to each year the employee is on the company payroll.
• C)An equal fraction of the APBO to each year of service from the employee's hire date to the employee's full eligibility date.
• D)An equal fraction of the EPBO to each year of service from the employee's hire date to the employee's full eligibility date.

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Definitions:

Cash Flow

The aggregate money movement into and out of a company, notably impacting its cash on hand.

Excess Capacity

The availability of more production capacity within a business than is currently needed to meet demand.

Special Order

An order for a product or service that is outside the company's normal scope of work, often requiring a unique set of costs and pricing.

Relevant Cost

Costs that are directly related to a specific business decision, affecting the future cash flows.