Generic Company sponsors an unfunded postretirement plan providing healthcare benefits. The following information relates to the current year's activity of Generic's postretirement benefit plan: $$\begin{array} { l c }
\text { Postretirenent benefit expense } & 150 \text { mullion } \
\text { Service cost } & 120 \text { million } \
\text { Amortization of net gain-AOCI } & 10 \text { millior } \
\text { Prior service cost-AOCI } & \text { none } \
\text { Retiree benefits paid (end of year) } & 30 \text { milliory }
\end{array}$$ The interest cost for the year is:

Question

Generic Company sponsors an unfunded postretirement plan providing healthcare benefits. The following information relates to the current year's activity of Generic's postretirement benefit plan: $$\begin{array} { l c } 
\text { Postretirenent benefit expense } & 150 \text { mullion } \
\text { Service cost } & 120 \text { million } \
\text { Amortization of net gain-AOCI } & 10 \text { millior } \
\text { Prior service cost-AOCI } & \text { none } \
\text { Retiree benefits paid (end of year) } & 30 \text { milliory }
\end{array}$$ The interest cost for the year is:

Quizplus · Accepted Answer

The postretirement benefit expense ($150) = service cost ($120) + interest cost ($x) - amortization of net gain ($10). Solving for x gives $40 [in millions]

Generic Company Sponsors an Unfunded Postretirement Plan Providing Healthcare Benefits