Problem NO: 14

Elton Co. has the following postretirement benefit plan balances on January 1, 2014.\nAccumulated postretirement benefi t obligation $2,250,000 Fair va

Elton Co. has the following postretirement benefit plan balances on January 1, 2014.

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Accumulated postretirement benefi t obligation $2,250,000 Fair value of plan assets 2,250,000

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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

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Service costs $ 75,000 $ 85,000

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Prior service costs amortization –0– 12,000

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Contributions (funding) to the plan 45,000 35,000

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Benefi ts paid 40,000 45,000

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Actual return on plan assets 140,000 120,000

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Expected rate of return on assets 8% 6%

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Instructions

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(a) Prepare a worksheet for the postretirement plan in 2014.

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(b) Prepare any journal entries related to the postretirement plan that would be needed at December 31, 2014.

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(c) Prepare a worksheet for 2015 and any journal entries related to the postretirement plan as of December 31, 2015.

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(d) Indicate the postretirement-benefit–related amounts reported in the 2015 financial statements.

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