Reference no: EM132663004
Question - On January 1, 2016, Flash and Dash Company adopted a healthcare plan for its retired employees. To determine eligibility for benefits, the company retroactively gives credit to the date of hire for each employee. The following information is available about the plan:
Service cost $32,550
Accumulated postretirement benefit obligation (1/1/16) 122,400
Expected return on plan assets 0
Amortization of Prior service cost 10,200
Payments to retired employees during 2016 4,280
Interest rate 10%
Average remaining service period of active plan participants (1/1/16) 12 years
Required -
1. Compute the OPRB expense for 2016 if the company uses the average remaining service life to amortize the prior service cost.
2. Prepare the required journal entries for 2016 if the plan is not funded.