Refer to the 2014 General Electric Retiree Health and Life Benefits disclosure appearing in Exhibit 14.6. Required: 1. Reconstruct the journal entries that GE would have made in 2014 to record the effects of its retiree health and life benefits plans. As was the case for the GE pension plan, the curtaiment loss represents faster amortization of prior service costs. 2. Show how GE's health and life benefits plans affected its AOCI account for 2014 Exhibit 14.6 EXHIBIT 14.6 General Electric Company: Edited, Condensed 2014 Retiree Health and Life Benefits Note We sponsor a number of retiree health and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans are discussed below; other such plans are not significant individu ally or in the aggregate. We use a December 31 measurement date for our plans. PRINCIPAL RETTREE BENEFIT PLANS provide health and life insurance benefits to certain eligible participants and these participants share in the cost of healthcare benefits. These plans cover approximately 193,000 retirees and dependents. In 2012, we amended our principal retiree benefit plans such that, effective January 1, 2015, our post-65 retiree medical plans will be closed to certain salaried and retired salaried employees who are not enrolled in the plans as of that date, and we will no longer offer company provided life insurance in retirement for cer tain salaried employees who retire after that date. Effective January 1, 2015, the Company will provide eligible participants with a Retiree Reimbursement Account to help pay for coverage purchased through a private exchange instead of offering our current post-65 retiree health plans. Schedule 1: Cost of Principal Retiree Benefit Plans (5 in milions) 2014 2013 2012 Service cost for benefits earned $164 $229 $ 219 Interest cost on benefit obligation 491 Expected return on plan assets (50) (60) (73) Net actuarial loss (gain) amortization (150) (45) Prior service cost 353 393 SIS Net curtailment settlement loss (gain) Retiree benefit plans cost $ 789 $927 $1.066 Los resulting from our agreement with Electrolux to sell the GE Appliances business 410 49 Schedule 2: Actuarial Assumptions The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the retiree benefit plan costs for the subsequent year. Discount rate Compensation increases Expected return on assets Initial healthcare trend ratele 2014 3.89% 4.10 7.00 6.00 December 31, 2013 2012 4.61 3.74 4.00 3.90 7.00 7.00 6.00 6.50 2011 4.09% 3.75 7.00 7.00 Weighted wege discount of 447%.3.77% and 3.945 were used for determinate of costs in 2014, 2013 and 2012, respectively For 2014, ultimately declining to 5$ for 2030 and thereafter. 2013 $11.804 229 Schedule 3: Accumulated Postretirement Benefit Obligation (APBO) Sin millions) 2014 Balance at January 1 $ 9913 Service cost for benefits earned 164 Interest cost on benefit obligation Participant contributions 52 Plan amendments (586) Actuarial loss (gain) 1.440 Benefits paid (104) Balance at December 31 $11,804 410 (1.8367 (746) $13,056 Primarily associated with discount rate and mortality assumptions change. "Primarily associated with discount rate change and lower costs from new healthcare supplier contracts The APBO for the retiree health plans was $8.445 million and $7.626 million at year-end 2014 and 2013, respectively A one percentage point change in the assumed healthcare cost trend rate would have the following effects. ($ in milions) 1% Increase 1% decrease APBO at December 31, 2014 $977 $(810) Service and interest cost in 2014 (47) 2014 S003 Schedule 4: Fair Value of Plan Assets ($ in milions) Balance at January 1 Actual gain on plan assets Employer contributions Participant contributions Benefits paid Balance at December 31 2013 $ 946 118 4 518 $23 004) 704) $ 813 Schedule 5: Retiree Benefit Asset (Liability) December 31 2014 2013 $19.890) $19.010) ($ in milions Funded status Liability recorded in the Statement of Financial Position Retiree health plans Due within one year Due after one year Retiree life plans Net liability recognized Amounts recorded in shareowners' equity (unamortized) Prior service cost Net actuarial loss Total $ (518) (7.927) (1.445) $19.890) $ (531) (7.095) (1.384) $19.010 $ 963 (1 667 $ 704 air value of assets less APBO as shown in the preceding tables. In 2015, we estimate that we will amortize $125 million of prior service cost and $55 million of net actuarial loss from shareowners' equity into retiree benefit plans cost. Comparable amortized amounts in 2014 were $353 million of prior service cost and $150 million of net actuarial loss Schedule 6: Estimated Future Benefit Payments in millions) 2015 2016 2017 2018 2019 2020-2024 $680 $665 $670 $675 $685 $3,285 FUNDING POLICY. We fund retiree health benefits on a pay-as-you-go basis. We expect to contribute approximately $540 million in 2015 to fund such benefits. We fund the retiree life insurance trust at our discretion Author note: We have numbered the schedules and recedered some information to make it easier for the reader Refer to the 2014 General Electric Retiree Health and Life Benefits disclosure appearing in Exhibit 14.6. Required: 1. Reconstruct the journal entries that GE would have made in 2014 to record the effects of its retiree health and life benefits plans. As was the case for the GE pension plan, the curtaiment loss represents faster amortization of prior service costs. 2. Show how GE's health and life benefits plans affected its AOCI account for 2014 Exhibit 14.6 EXHIBIT 14.6 General Electric Company: Edited, Condensed 2014 Retiree Health and Life Benefits Note We sponsor a number of retiree health and life insurance benefit plans (retiree benefit plans). Principal retiree benefit plans are discussed below; other such plans are not significant individu ally or in the aggregate. We use a December 31 measurement date for our plans. PRINCIPAL RETTREE BENEFIT PLANS provide health and life insurance benefits to certain eligible participants and these participants share in the cost of healthcare benefits. These plans cover approximately 193,000 retirees and dependents. In 2012, we amended our principal retiree benefit plans such that, effective January 1, 2015, our post-65 retiree medical plans will be closed to certain salaried and retired salaried employees who are not enrolled in the plans as of that date, and we will no longer offer company provided life insurance in retirement for cer tain salaried employees who retire after that date. Effective January 1, 2015, the Company will provide eligible participants with a Retiree Reimbursement Account to help pay for coverage purchased through a private exchange instead of offering our current post-65 retiree health plans. Schedule 1: Cost of Principal Retiree Benefit Plans (5 in milions) 2014 2013 2012 Service cost for benefits earned $164 $229 $ 219 Interest cost on benefit obligation 491 Expected return on plan assets (50) (60) (73) Net actuarial loss (gain) amortization (150) (45) Prior service cost 353 393 SIS Net curtailment settlement loss (gain) Retiree benefit plans cost $ 789 $927 $1.066 Los resulting from our agreement with Electrolux to sell the GE Appliances business 410 49 Schedule 2: Actuarial Assumptions The actuarial assumptions at December 31 are used to measure the year-end benefit obligations and the retiree benefit plan costs for the subsequent year. Discount rate Compensation increases Expected return on assets Initial healthcare trend ratele 2014 3.89% 4.10 7.00 6.00 December 31, 2013 2012 4.61 3.74 4.00 3.90 7.00 7.00 6.00 6.50 2011 4.09% 3.75 7.00 7.00 Weighted wege discount of 447%.3.77% and 3.945 were used for determinate of costs in 2014, 2013 and 2012, respectively For 2014, ultimately declining to 5$ for 2030 and thereafter. 2013 $11.804 229 Schedule 3: Accumulated Postretirement Benefit Obligation (APBO) Sin millions) 2014 Balance at January 1 $ 9913 Service cost for benefits earned 164 Interest cost on benefit obligation Participant contributions 52 Plan amendments (586) Actuarial loss (gain) 1.440 Benefits paid (104) Balance at December 31 $11,804 410 (1.8367 (746) $13,056 Primarily associated with discount rate and mortality assumptions change. "Primarily associated with discount rate change and lower costs from new healthcare supplier contracts The APBO for the retiree health plans was $8.445 million and $7.626 million at year-end 2014 and 2013, respectively A one percentage point change in the assumed healthcare cost trend rate would have the following effects. ($ in milions) 1% Increase 1% decrease APBO at December 31, 2014 $977 $(810) Service and interest cost in 2014 (47) 2014 S003 Schedule 4: Fair Value of Plan Assets ($ in milions) Balance at January 1 Actual gain on plan assets Employer contributions Participant contributions Benefits paid Balance at December 31 2013 $ 946 118 4 518 $23 004) 704) $ 813 Schedule 5: Retiree Benefit Asset (Liability) December 31 2014 2013 $19.890) $19.010) ($ in milions Funded status Liability recorded in the Statement of Financial Position Retiree health plans Due within one year Due after one year Retiree life plans Net liability recognized Amounts recorded in shareowners' equity (unamortized) Prior service cost Net actuarial loss Total $ (518) (7.927) (1.445) $19.890) $ (531) (7.095) (1.384) $19.010 $ 963 (1 667 $ 704 air value of assets less APBO as shown in the preceding tables. In 2015, we estimate that we will amortize $125 million of prior service cost and $55 million of net actuarial loss from shareowners' equity into retiree benefit plans cost. Comparable amortized amounts in 2014 were $353 million of prior service cost and $150 million of net actuarial loss Schedule 6: Estimated Future Benefit Payments in millions) 2015 2016 2017 2018 2019 2020-2024 $680 $665 $670 $675 $685 $3,285 FUNDING POLICY. We fund retiree health benefits on a pay-as-you-go basis. We expect to contribute approximately $540 million in 2015 to fund such benefits. We fund the retiree life insurance trust at our discretion Author note: We have numbered the schedules and recedered some information to make it easier for the reader