A company's postretirement health care benefit plan had an APBO of $265,000 on January 1, 2013. During 2013, retiree benefits paid were $40,000. The discount rate for the plan for this year was 10%. Service cost for 2013 was $80,000. Plan assets (fair value) increased during the year by $45,000. The amount of the APBO at December 31, 2013, was:

Question

Quizplus · Accepted Answer

The APBO at the end of the year is calculated as: Beginning APBO + Service Cost + Interest Cost - Benefits Paid. Interest Cost is 10% of the beginning APBO ($265,000 * 10% = $26,500). So, $265,000 + $80,000 + $26,500 - $40,000 = $331,500.

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