The EPBO for a particular employee on January 1,2016,was $150,000.The APBO at the beginning of the year was $30,000.The appropriate discount rate for this postretirement plan is 5%.The employee is expected to serve the company for a total of 25 years with 5 of those years already served as of January 1,2016.What is the APBO at December 31,2016?

Question

Quizplus · Accepted Answer

The APBO at the beginning of the year is $30,000. The interest cost for the year is $30,000 * 5% = $1,500. The service cost for the year is ($150,000 / 25) = $6,000. Therefore, the APBO at December 31, 2016, is $30,000 + $1,500 + $6,000 = $37,800.

The EPBO for a Particular Employee on January 1,2016,was $150,000