13. The following data are for Guava Company\'s retiree health care plan for the

Question

13. The following data are for Guava Company's retiree health care plan for the current calendar year.

What is the correct entry to record postretirement benefit expense for the current year? (Do not round your intermediate calculations and round your answer to the nearest whole dollar.)

a)   Postretirement benefit expense2,830       

APBO 2,830

b) Postretirement benifit expense 4,000

APBO 4,000

c) Postretirement benifit expense 4,030

Cash 4,030

d) Postretirement benefit expense 4,030

APBO 4,030

  Number of employees covered   5   Years employed as of January 1   4 (each)   Attribution period   20 years   EPBO, January 1   $62,000   EPBO, December 31   $65,720   Interest rate   6%   Funding and plan assets   None

Explanation / Answer

APBO as on Jan 1st=(4/20)*62,000=12,400

EPBO as on dec 31st= 65720/20=$3286

Interest cost= 12400*6%=$744

Total APBO= 3286+744=4,030

option d

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