Question

Exercise 17-27 Postretirement benefits; components of postretirement benefit expense (LO17-11] Data pertaining to the postretirement health care benefit plan of Sterling Properties include the following for 2018: ($ in wees) $ 142 1.es 50 Service cost Accumulated postretirement benefit obligation, January 1 Plan assets (fair value), January 1 Prior service cost-AOCI Net gain-AOCI (2018 amortization, $1) Retiree benefits paid (end of year) Contribution to health care benefit fund (end of year) Discount rate, 6% Return on plan assets (actual and expected), 18% none 193 91 215 Required: 1. Determine the postretirement benefit expense for 2018. 2. Prepare the appropriate journal entries to record the postretirement benefit expense, funding, and retiree benefits for 2018. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the postretirement benefit expense for 2018. (Amounts to be deducted should be indicated with a minus sign.) ($ in 000s) Postretirement benefit expense 5 0 Required 1 Required 2 >

Answer 1

Answer:

1) The postretirement benefit expense is calculated as follows:

Service cost	142
Interest cost(1000*6%)	60
Return on plan assets(60*10%)	-6
Amortization of prior service cost	0
Amortization of net gain	-1
Postretirement benefit expense	195

2)

The journal entries are as follows:

Account Title	Debit	Credit
Postretirement benefit expense(From part 1)	$195
Plan assets($60*10%)	$6
Net gain AOCI	$1
APBO()		$202
(To record postretirement benefit expense)
Plan assets	$215
Cash(Contribution to fund		$215
(To record the funding)
PBO	$91
Plan assets (Retiree benefits)		$91
(To record the retiree benefits)