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 $7,840. The plan is not funded, and the discount rate is 10%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $6,510 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $71,270 and $42,010, respectively. Additional information on January 1, 2019, is as follows: Employee Status Age Expected Retirement Age Accumulated Postretirement Benefit Obligation 1. Employee 31 65 $9,300 2. Employee 55 65 75,600 3. Retired 67 — 50,700 $135,600 Required: 1. Compute the OPRB expense for 2019 if Vasby 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.
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 $7,840. The plan is not funded, and the discount rate is 10%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $6,510 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $71,270 and $42,010, respectively. Additional information on January 1, 2019, is as follows: Employee Status Age Expected Retirement Age Accumulated Postretirement Benefit Obligation 1. Employee 31 65 $9,300 2. Employee 55 65 75,600 3. Retired 67 — 50,700 $135,600 Required: 1. Compute the OPRB expense for 2019 if Vasby 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.
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 13E
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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 $7,840. The plan is not funded, and the discount rate is 10%. All employees were hired at age 28 and become eligible for full benefits at age 58. Employee C was paid $6,510 for postretirement healthcare benefits in 2019. On December 31, 2019, the accumulated postretirement benefit obligation for Employees B and C were $71,270 and $42,010, respectively. Additional information on January 1, 2019, is as follows:
|
Employee Status
|
Age
|
Expected Retirement Age
|
Accumulated Postretirement Benefit Obligation
|
| 1. Employee | 31 | 65 | $9,300 |
| 2. Employee | 55 | 65 | 75,600 |
| 3. Retired | 67 | — | 50,700 |
| $135,600 | |||
Required:
| 1. | Compute the OPRB expense for 2019 if Vasby uses the average remaining service life to amortize the prior service cost. |
| 2. | Prepare all the required |
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