Retirement Benefits

Question 1

What are some examples of “Other postemployment benefits” paid by companies?

Answer 1

1. ) Health Care (Biggest)
2. ) Dental Care
3. ) Eye Care
4. ) Life Insurance
5. ) Benefits related to legal services, tax services, tuition assistance, day care and housing.

Question 2

Where is the Postretirement benefit liability reported?

Answer 2

In the balance Sheet

Question 3

What is the primary post retirement benefit measure?

Answer 3

APBO (Accumulated Post Retirement Benefit Obligation

Question 4

When is there no amortization of transition obligation for postretirement benefit expense?

Answer 4

When firms elected to recognize immediately the entire Accumulated Postretirement Benefit Obligation (APBO) as an accounting change, decreasing income in the year of transition

Question 5

What type of postretirement benefit is the most costly?

Answer 5

Accumulated Postretirement Benefit Obligation (APBO)

Question 6

List the six components of postretirement benefit expense.

Answer 6

1. )Service cost;
2. )Interest cost;
3. )Expected return on assets;
4. )Amortization of prior service cost;
5. )Amortization of net gain or loss at Jan. 1;
6. )Amortization of transition obligation

Question 7

Beyond what date is no further service cost recognized for an employee?

Answer 7

Full eligibility date

Question 8

List the steps in computing the primary obligation for retirement benefits

Answer 8

Compute EPBO (present value of benefits expected to be paid); then multiply EPBO by the fraction of the service period required represented by service to date (yields APBO).