Careful Consulting Company has an unfunded postretirement benefit plan. On Decem
ID: 2610136 • Letter: C
Question
Careful Consulting Company has an unfunded postretirement benefit plan. On December 31, 2018, the following data were available concerning changes in the plan's accumulated postretirement benefit obligation with respect to one of Careful's employees:
Required:
1. Over how many years is the expected postretirement benefit obligation being expensed?
2. What is the expected postretirement benefit obligation at the end of 2018?
3. When was the employee hired? (Round your answer to 1 decimal place.)
4. What is the expected postretirement benefit obligation at the beginning of 2018?
Number of years _____
Expected postreirement benefit obligation ______
The employee was hired ______ years before 2018
Expected postretirement benefit obligation ________
APBO, January 1 $ 32,728 Interest cost 2,618 ($32,728 × 8%) Service cost 4,000 (88,000 × 1/22) APBO, December 31 $ 39,346
Explanation / Answer
1) Number of years _____ 22 years 2) Expected postreirement benefit obligation ______ $88,000 3) The employee was hired ______ years before 2018 $88,000 x 9.8365/22 = $39,346 The employee was hired 9.8 years prior to Dec. 31, 2018, around the middle of March, 2007. 4) Expected postretirement benefit obligation ____ $88,000/1.08 = $81,481