Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. gorky-park corporation provides postretirement hea

Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 10 years...

80.2K

Verified Solution

Question

Accounting

Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 10 years of service and reach age 60 while in service. On January 1, 2018, the following plan-related data were available:

($ in millions)
Accumulated postretirement benefit obligation $ 150
Fair value of plan assets None
Average remaining service period to retirement 25 years (same in previous 10 yrs.)
Average remaining service period to full eligibility 20 years (same in previous 10 yrs.)

On January 1, 2018, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $40 million. Management chooses to amortize the prior service cost on a straight-line basis. The service cost for 2018 is $44 million. The interest rate is 7%. Required: 1. Calculate the postretirement benefit expense for 2018. 2. Prepare the journal entry to record the expense.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students