The following facts relate to the Patton Co. postretirement benefits plan for 2015: $$\begin{array} { l r }
\text { Service cost } & \$ 180,000 \
\text { Discount rate } & 9 \% \
\text { APBO, January 1, 2015 } & \$ 1,500,000 \
\text { EPBO, January 1, 2015 } & \$ 2,000,000 \
\text { Benefit payments to employees } & \$ 115,000
\end{array}$$ The amount of postretirement expense for 2015 is

Question

The following facts relate to the Patton Co. postretirement benefits plan for 2015: $$\begin{array} { l r } 
\text { Service cost } & \$ 180,000 \
\text { Discount rate } & 9 \% \
\text { APBO, January 1, 2015 } & \$ 1,500,000 \
\text { EPBO, January 1, 2015 } & \$ 2,000,000 \
\text { Benefit payments to employees } & \$ 115,000
\end{array}$$ The amount of postretirement expense for 2015 is

Quizplus · Accepted Answer

The postretirement expense for 2015 can be calculated as follows: Service cost + Interest cost - Benefit payments. The interest cost is the discount rate applied to the APBO at the beginning of the year, which is 9% of $1,500,000 = $135,000. Therefore, the total postretirement expense is $180,000 (service cost) + $135,000 (interest cost) - $115,000 (benefit payments) = $200,000 + $115,000 = $315,000.

The Following Facts Relate to the Patton Co The Amount of Postretirement Expense for 2015 Is A) $180,000

The Following Facts Relate to the Patton Co The Amount of Postretirement Expense for 2015 Is
A) $180,000