Postretirement benefits; changes in the APBO
Response to the following problem:
On January 1, 2016, Medical Transport Company's accumulated postretirement benefit obligation was $25 million. At the end of 2016, retiree benefits paid were $3 million. Service cost for 2016 is $7 million. Assumptions regarding the trend of future health care costs were revised at the end of 2016, causing the actuary to revise downward the estimate of the APBO by $1 million. The actuary's discount rate is 8%. Determine the amount of the accumulated postretirement benefit obligation at December 31, 2016.