The information below pertains to the retiree health care plan of Thompson Technologies: Thompson began funding the

Question:

The information below pertains to the retiree health care plan of Thompson Technologies:

Thompson began funding the plan in 2011 with a contribution of $127,000 to the benefit fund at the end of the year. Retirees were paid $52,000. The actuary's discount rate is 5%. There were no changes in actuarial estimates and assumptions.

Required:

Determine the following amounts for 2011:

1. Service cost.

2. Postretirement benefit expense.

3. Net postretirement benefit liability

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...