Retirement Benefits Fun Facts!

Curious about Firewall Corporation's retiree health plan for 2024?

What is the APBO at the beginning of 2024?

What is the interest cost for 2024?

What is service cost for 2024?

Can you prepare the journal entry to record the postretirement benefit expense for 2024?

Let's Unveil the Answers!

Accumulated postretirement benefit obligation (APBO) at the beginning of 2024 is $123,200.

Interest cost for 2024 is $11,200.

Service cost for 2024 is $8,000.

Journal entry to record the postretirement benefit expense for 2024:

Dr. Postretirement benefit expense $20,200

Cr. Accrued postretirement benefit liability $20,200

Are you ready to dive into the exciting world of retirement benefits with Firewall Corporation? Let's explore the fascinating details of their retiree health plan for 2024!

Understanding the Calculations Behind the Scenes

APBO is the present value of the estimated future benefits to be paid to retirees. It is calculated using a formula that factors in the number of employees, years of service, benefit per year, interest rate, and number of years until benefits begin. In this case, the APBO at the beginning of 2024 is $123,200.

Interest cost for 2024 is the increase in the APBO due to the passage of time, calculated as $11,200.

Service cost for 2024 represents the benefits earned by employees during the current year, totaling $8,000.

The journal entry records the postretirement benefit expense for 2024, highlighting the financial impact of these benefits.

By unraveling the numbers and understanding the intricacies of retirement benefit calculations, we gain insight into the dedication and commitment of Firewall Corporation to support its retirees.