Question

Brown Industries provides postretirement health care benefits to employees. On January 1 of the current calendar year, the following data were available. Prior service cost APBO Fair value of plan assets Average remaining service period to retirement Average remaining service period to full eligibility $ 57,000 $550,000 none 25 years 20 years Management amortizes prior service cost on a straight-line basis. The interest rate is 10%. Service cost for the current year is $102,000. Required: 1. Calculate the prior service cost amortization for the current year. 2. Calculate the postretirement benefit expense for the current year. 3. Prepare the entry to record the postretirement benefit expense for the current year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Calculate the prior service cost amortization for the current year. Prior service cost Service period to full eligibility Amortization amount 0

Answer 1

fx B C D E 1 2 57,000 20 3 1 Prior Service Cost Service period to full eligibility Amortization Amount ( 57,000 / 20 ) 4 2,850 5 6 7 2 Service Cost 102,000 55,000 =550000* 10% 8 9 Interest Cost Return on plan assets Amortization of prior service expense Postretirement benefit expense 10 2,850 159,850 11 12 13 Credit Debit 159,850 14 3 General Journal Postretirement benefit expense Postretirement benefit liability Prior service cost 15 157,000 2,850 16 17 18 19 20 21