Lender Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current calendar year, the following plan - related data were available. APBO balance $ 159,000,000 Fair value of plan assets none Average remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $29,000,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $49,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Lender Company provides postretirement health care benefits to employees who provide at least 10 years of
service and reach the age of 65 while in service. On January 1 of the current calendar year, the following
plan - related data were available. APBO balance $ 159,000,000 Fair value of plan assets none Average
remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years
On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines
that the cost of making the amendment increases the APBO by $29,000,000. Management chooses to
amortize this amount on a straight-line basis. The service cost is $49,000,000. The appropriate interest rate
is 10%. Required: Calculate the postretirement benefit expense for the current year.
Transcribed Image Text:Lender Company provides postretirement health care benefits to employees who provide at least 10 years of service and reach the age of 65 while in service. On January 1 of the current calendar year, the following plan - related data were available. APBO balance $ 159,000,000 Fair value of plan assets none Average remaining service period to retirement 25 years Average remaining service period to full eligibility 20 years On January 1 of the current year, Lender amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment increases the APBO by $29,000,000. Management chooses to amortize this amount on a straight-line basis. The service cost is $49,000,000. The appropriate interest rate is 10%. Required: Calculate the postretirement benefit expense for the current year.
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