ACCOUNTING
Gorky-Park Corporation provides postretirement health care benefits to employees who provide at least 12 years of service and reach age 62 while in service. On January 1, 2011, following plan-related data were available
Accumulated postretirement benefit obligation 130
Fair value of plan assets none
Average remaining service period to retirement 25 years (same in previous 10 yrs)
Average remaining service period to full eligibility 20 years (same in previous 10 yrs)
On January 1, 2011, Gorky-Park amends the plan to provide certain dental benefits in addition to previously provided medical benefits. The actuary determines that the cost of making the amendment retroactive increases service cost for 2011 is $34 million. The interest rate is 8%.
Requirements
1. Calculate the postretirement benefit expense for 2011.
2. Prepare the journal entry to record the expense
Click here for the SOLUTION
