At December 31, 1998, Gypsum, Inc., estimated the following net incurred claims costs for one of its employees. for each year of the employee's retirement period to which the plan applies:

The postretirement plan of Gypsum provides no benefits after age 68. For full eligibility, an employee must serve 20 years. The employee in question is 51 years old at December 31, 1998, and has served 15 years at that date. The employee is expected to retire at age 63. Gypsum's discount rate for postretirement benefit accounting purposes is 8 percent.
Required:
1. Determine the expected post retirement benefit obligation and accumulated postretirement benefit obligation at December 31, 1998, for this employee.
2. Assuming that the employee works another five years after December 31, 1998, and that there are no changes in expected net incurred claims costs, determine the expected postretirement benefit obligation and accumulated postretirement benefit obligation at December 31, 2003, for this employee.

Transcribed Image Text:

Estimated Net Incurred Claims Cost by Age At Age $4.194 64 4.640 65 1,284 66 67 1,421 1,577 68