A company's postretirement health care benefit plan had an APBO of $265,000 on January 1,2016.During 2016,retiree benefits paid were $40,000.The discount rate for the plan for this year was 10%.Service cost for 2016 was $80,000.Plan assets (fair value)increased during the year by $45,000.The amount of the APBO at December 31,2016,was:

Question

Quizplus · Accepted Answer

The APBO at the end of the year can be calculated using the following formula:

APBO end of year = APBO beginning of year + service cost + interest cost - benefits paid +/- actuarial gains/losses

APBO end of year = $265,000 + $80,000 + ($265,000 x 10%) - $40,000 + $0
APBO end of year = $265,000 + $80,000 + $26,500 - $40,000
APBO end of year = $331,500

Therefore, the correct answer is (C) $331,500.

A Company's Postretirement Health Care Benefit Plan Had an APBO