Question: (Postretirement Benefit Worksheet-2 Years) Elton Co. has the following postretirement benefit plan balances on January 1, 2014.
Accumulated post retirement benefit obligation $2,250,000
Fair value of plan assets 2,250,000
The interest (settlement) rate applicable to the plan is 10%. On January 1, 2015, the company amends the plan so that prior service costs of $175,000 are created. Other data related to the plan are:
2014 2015
Service cost $ 75,000 $ 85,000
Prior service cost amortization -0- 12,000
Contribution to the plan 45,000 35,000
Benefits paid 40,000 45,000
Actual and expected return on assets 140,000 120,000
Expected rate of return on assets 8% 6%
Instructions: (a) Prepare a worksheet for the postretirement plan in 2014.
(b) Prepare any journal entries related to the postretirement plan that would be needed at December 31, 2014.
(c) Prepare a worksheet for 2015 and any journal entries related to the postretirement plan as of December 31, 2015.
(d) Indicate the postretirement-benefit-related amounts reported in the 2015 financial statements.