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Intermediate Accounting (Kieso)
Found in: Page 1168

Short Answer

Englehart Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost $ 90,000 Prior service cost amortization 3,000 Contribution to the plan 56,000 Actual and expected return on plan assets 62,000 Benefits paid 40,000 Plan assets at January 1, 2017 710,000 Accumulated postretirement benefit obligation at January 1, 2017 760,000 Accumulated OCI (PSC) at January 1, 2017 100,000 Dr. Discount rate 9% Instructions Compute the postretirement benefit expense for 2017.

Retirement is a term used when an employee reaches a certain age(as prescribed by the government) and is no longer eligible for employment. Pension is paid to these employees to manage their expenses.

See the step by step solution

Step by Step Solution

Step 1: Given the following amounts:



Service cost


Prior service cost amortization




Actual and expected return on plan assets




Plan assets Jan 1, 2017


Accumulated postretirement benefit obligation


Accumulated OCI


Discount rate


Step 2: Computation of postretirement benefit expense for the year 2017.



Service cost


Add: Interest on accumulated postretirement benefit obligation


Less: Expected return on plan assets


Add: Amortization of prior service cost


Postretirement Expense in 2017


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