Question

Lorin Management Services 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 Lorin's employees:

APBO at the beginning of 2018	$	37,946
Interest cost: ($37,946 × 12%)		4,554
Service cost: ($42,500 × 1/17)		2,500
Portion of EPBO attributed to 2018
APBO at the end of 2018	$	45,000

Required:
1. Over how many years is the expected postretirement benefit obligation being expensed (attribution period)?
2. What is the expected postretirement benefit obligation at the end of 2018?
3. When was the employee hired by Lorin?
4. What is the expected postretirement benefit obligation at the beginning of 2018?

Answer 1

Answer: 10 the expected postretirement benefit obligation is being | expensed over a period of 17 years (2) Ihe expected poftretirement benefit obligation at the end Of 2018 ij $42.500 3) Accuenculated poltretirement Benefit ofication - Expected portretirement Benefit oblication X Frackon Earned $45.000 = 42500 x, na - 45000 45000 x= 42500/17) - 2500 a=18 years EPBO at the beginning of the year x interest multiplier = EPBO - at the end of the year 2x 1.125$ 42500 $42,500 x= T012 = 37946.42857 ? 37946.43