On January 1, 2018, Tom\'s Transport Company\'s accumulated postretirement benef

Question

On January 1, 2018, Tom's Transport Company's accumulated postretirement benefit obligation was $23,000,000. At the end of 2018, retiree benefits paid were $2,800,000. Service cost for 2018 is $5,300,000. At the end of 2018, there was no prior service cost or net gain or loss. Assumptions regarding the trend of future health care costs were revised at the end of 2018. This revision caused the actuary to revise downward the estimate of the APBO by $430,000. The appropriate discount rate was 7%.

Required:
Determine the amount of the accumulated postretirement benefit obligation at December 31, 2018. (Amounts to be deducted should be indicated with a minus sign.)

Explanation / Answer

Accumulated Post Retirement Benefit Obligation Opening balance-. $23000000

Service cost-. $5300000

Interest=(opening balance - downward revision)× 7%= (23000000-430000)×7%= $1579900

Retiree benefit paid=. -$2800000

Total = $27079900

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