Stockton Labeling Company has a retiree health care plan. Employees become fully
ID: 2445542 • Letter: S
Question
Stockton Labeling Company has a retiree health care plan. Employees become fully eligible for benefits after working for the company eight years. Stockton hired Misty Newburn on January 1, 2013. As of the end of 2013, the actuary estimates the total net cost of providing health care benefits to Newburn during her retirement years to have a present value of $29,000. The actuary’s discount rate is 10%.
Prepare a schedule that shows the EPBO, the APBO, the service cost, the interest cost, and the postretirement benefit expense for each of the years 2013-2020. (Due to rounding 2020 EPBO may not equal total total expense. Enter your answers in whole dollars.)
Stockton Labeling Company has a retiree health care plan. Employees become fully eligible for benefits after working for the company eight years. Stockton hired Misty Newburn on January 1, 2013. As of the end of 2013, the actuary estimates the total net cost of providing health care benefits to Newburn during her retirement years to have a present value of $29,000. The actuary’s discount rate is 10%.
Explanation / Answer
EPBO Fraction Earned APBO Service cost interest cost@10% Expense 1 2 (3=1*2) (4=((1)/8) 5=previous year (3)*10% 6=4+5 2013 $ 29,000 1/8 $ 3,625 $ 3,625 $ - $ 3,625 2014 $ 31,900 2/8 $ 7,975 $ 3,988 $ 363 $ 4,350 2015 $ 35,090 3/8 $ 13,159 $ 4,386 $ 798 $ 5,184 2016 $ 38,599 4/8 $ 19,300 $ 4,825 $ 1,316 $ 6,141 2017 $ 42,459 5/8 $ 26,537 $ 5,307 $ 1,930 $ 7,237 2018 $ 46,705 6/8 $ 35,029 $ 5,838 $ 2,654 $ 8,492 2019 $ 51,375 7/8 $ 44,953 $ 6,422 $ 3,503 $ 9,925 2020 $ 56,513 9/8 $ 63,577 $ 7,064 $ 4,495 $ 11,559 Total $ 41,455 $ 15,058 $ 56,513