Question

Kreter Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost $ 45,000 Contribution to the plan 10,000 Actual and expected return on plan assets 11,000 Benefits paid 20,000 Plan assets at January 1, 2017 110,000 Accumulated postretirement benefit obligation at January 1, 2017 330,000 Discount rate 8% Instructions Compute the postretirement benefit expense for 2017

Short answer

Postretirement benefit expense is used when an organizationestimates the pension cost during a financial year.It strictly depends upon the type ofpension plantaken from the organization.

Step-by-step solution

Given the following amounts:

Particulars	Amount
Service cost	$45,000
Contribution	$10,000
Actual and expected return on plan assets	$11,000
Benefits	$20,000
Plan assets at Jan 1, 2017	$110,000
Accumulated postretirement benefit	$330,000
Discount rate	8%

Computation of postretirement benefit expense for the year 2017.

Particulars	Amount
Service cost	$45,000
Add: Interest on liability$\left(\mathbf{\$}\mathbf{330}\mathbf{,}\mathbf{000}\mathbf{\times }\mathbf{8}\mathbf{\%}\right)$	$26,400
Less: Actual and expected return on plan assets	$11,000
Postretirement benefit expense in 2017.	$60,400