Postretirement benefits; determine APBO, service cost, interest cost; prepare journal entry
Response to the following problem:
The following data are available pertaining to Household Appliance Company's retiree health care plan for 2016:
Number of employees covered 2
Years employed as of January 1, 2016 3 (each)
Attribution period 25 years
Expected postretirement benefit obligation, Jan 1 $50,000
Expected postretirement benefit obligation, Dec 31 $53,000
Interest rate 6%
Funding none
Required:
1. What is the accumulated postretirement benefit obligation at the beginning of 2016?
2. What is interest cost to be included in 2016 postretirement benefit expense?
3. What is service cost to be included in 2016 postretirement benefit expense?
4. Prepare the journal entry to record the postretirement benefit expense for 2016.