At December 31,2015,Mallory,Inc. ,reported in its balance sheet a net loss of $12 million related to its postretirement benefit plan.The actuary for Mallory at the end of 2016 increased her estimate of future health care costs.Mallory's entry to record the effect of this change will include:

Question

Quizplus · Accepted Answer

The increase in the estimate of future health care costs will increase the Accumulated Postretirement Benefit Obligation (APBO), which is recorded as a credit. The offsetting debit is recorded in Other Comprehensive Income (OCI) as a loss.