Question

The information below pertains to the retiree health care plan of Thompson Technologies: ($ in 000s) 2018 Beginning Balances 2018 Ending Balances Accumulated postretirement benefit obligation $ 560 $ 585 Plan assets 0 75 Funded status (560 ) (510 ) Prior service cost–AOCI 195 158 Net gain–AOCI (65 ) (64 ) Thompson began funding the plan in 2018 with a contribution of $142,000 to the benefit fund at the end of the year. Retirees were paid $53,000. The actuary’s discount rate is 5%. There were no changes in actuarial estimates and assumptions. Required: 1. Determine the service cost for 2018. 2. Determine the postretirement benefit expense for 2018. 3. Determine the net benefit liability for 2018.

Answer 1

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Answers are highlighted in yellow: Solution 1)APBO, $ 560 $ 28 $ 50 (plug) Beginning, 2018 Interest Cost Service cost Loss/Gain on PBO Less: Retirement benefits Ending, 2018 560*596) (585+53-560-28) S-53 $ 585 2) Service Cost Interest cost Return on plan assets Amortization of PSC Net Gain Postretirement benefit expense $ 28 $37 $ 114 (195-158) $ 585 $ 75 $ 510 3) Accumulated postretirement benefit obligation Plan Assets Net postretirement benefit liability