Question - Bridgewater Company provides postretirement health care benefits to employees who provide at least 15 years of service and reach the age of 65 while in service. On December 31, 2014, the following plan-related data was available.
APBO balance - $20,000,000
Fair value of plan assets - none
Average remaining service period to retirement - 20 years
Average remaining service period to full eligibility - 10 years
On January 1, 2015, Bridgewater amends the plan to provide dental benefits. The actuary determines that the cost of making the amendment retroactive increases the APBO by $4,000,000. Management of the company chooses to amortize this amount on a straight-line basis. The service cost is $3,500,000. The appropriate interest rate is 8%. Calculate the postretirement benefit expense for 2015.