Question

A company's postretirement health care benefit plan had an APBO of $220,000 on January 1, 2021. During 2021, retiree benefits paid were $35,500. The discount rate for the plan for this year was 10%. Service cost for 2021 was $75,500. Plan assets (fair value) increased during the year by $37,800. The amount of the APBO at December 31, 2021, was:

Answer 1

$282,000

Step-by-step explanation:

APBO means Accumulated post retirement benefit obligation

Computation of amount of the APBO at December 31, 2021

APBO at the beginning $220,000

Add: Service cost $75,500

Add: Interest cost $22,000 (220,000*10%)

Less: Benefit paid $35,500

APBO at December 31 $282,000