Chapter 6 Section 2: Postretirement Benefits Other Than Pensions

Question 1

What conditions must be satisfied for benefits to be accrued?

Answer 1

1. Obligation is attributable to employees’ services already rendered
2. Employees’ rights accumulate or vest
3. Payment is probable
4. The amount of benefits can be reasonably estimated

Question 2

Define Accumulated Postretirement Benefit Obligation and Expected Postretirement Benefit Obligation

Answer 2

APBO is the PV of future benefits vested up to now.

EPBO is the PV of future benefits expected to be paid up to now (APBO + nonvested portion)

Question 3

How do you calculate the net postretirement benefit expense?

Answer 3

SIRAGE - the same as pensions

Question 4

Explain the amortization of the transition obligate (E in SIRAGE)

Answer 4

Either expense it at once, or use straightline like before, but use 20 years instead