Question

Englehart Co. provides the following information about its postretirement benefit plan for the year 2017. Service cost $ 90,000 Prior service cost amortization 3,000 Contribution to the plan 56,000 Actual and expected return on plan assets 62,000 Benefits paid 40,000 Plan assets at January 1, 2017 710,000 Accumulated postretirement benefit obligation at January 1, 2017 760,000 Accumulated OCI (PSC) at January 1, 2017 100,000 Dr. Discount rate 9% Instructions Compute the postretirement benefit expense for 2017.

Short answer

Retirement is a term used when anemployee reaches a certain age(as prescribed by the government) and is no longer eligible for employment.Pension is paid to these employees to manage theirexpenses.

Step-by-step solution

Given the following amounts:

Particulars	Amount
Service cost	$90,000
Prior service cost amortization	$3,000
Contribution	$56,000
Actual and expected return on plan assets	$62,000
Benefits	$40,000
Plan assets Jan 1, 2017	$710,000
Accumulated postretirement benefit obligation	$760,000
Accumulated OCI	$100,000
Discount rate	9%

Computation of postretirement benefit expense for the year 2017.

Particulars	Amount
Service cost	$90,000
Add: Interest on accumulated postretirement benefit obligation	$68,400
Less: Expected return on plan assets	$62,000
Add: Amortization of prior service cost	$3,000
Postretirement Expense in 2017	$99,400