The following facts relate to the postretirement benefits plan of Keller, Inc. for 2015: $\begin{array}{lr}
\text { Service cost } & \$ 730,000 \
\text { Discount rate } & 8 \% \
\text { APBO, January 1,2015 } & \$ 4,000,000 \
\text { EPBO, January 1, 2015 } & \$ 4,800,000 \
\text { Average remaining service to full eligibility } & 20 \text { years } \
\text { Average remaining service to expected retirement } & 25 \text { years }
\end{array}$ The amount of postretirement expense for 2015 is

Question

Quizplus · Accepted Answer

The correct answer is A.The postretirement expense for 2015 is calculated as follows:Service cost = $730,000Interest cost on APBO = $4,000,000 x 8% = $320,000Amortization of unrecognized prior service cost = ($4,800,000 - $4,000,000) / 20 years = $40,000Expected return on plan assets = $4,800,000 x 8% = $384,000Postretirement expense = $730,000 + $320,000 + $40,000 - $384,000 = $1,050,000

The Following Facts Relate to the Postretirement Benefits Plan of Keller