Question: Zeff Manufacturing provides the following information about its postretirement health care plan for 2014:
Accumulated postretirement benefit obligation on 1/1/14 $300,000
Fair value of plan assets on 1/1/14 30,000
Benefits paid to retirees at 12/31/14 6,500
Service cost for 2014 20,000
Recognized prior service cost 10,000
Recognized actuarial loss 7,000
Actual return on plan assets 4,500
Contributions to the plan at 12/31/14 12,000
Discount rate 8%
Expected long-run rate of return on plan assets 10%
Required: 1. Determine Zeff's postretirement health care expense in 2014.
2. Determine the fair value of plan assets at December 31, 2014.
3. Determine the APBO amount at December 31, 2014.