CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Imagine Publishers, Inc. sponsors a postretirement plan providing health care benefits. The following information relates to the current year's activity of Imagine's postretirement benefit plan:

Service cost: $120 million.
Actual and expected return on plan assets: 30 million.
Interest cost: 40 million.
Amortization of net loss: 10 million.
Amortization of prior service cost: 5 million.
Amortization of transition obligation: 15 million.
Retiree benefits paid (end of year): 35 million.

What is Imagine's postretirement benefit expense?
A. $140 million.
B. $150 million.
C. $160 million.
Explanation: The postretirement benefit expense is the net of the service cost ($120) + interest cost ($40) - expected return on plan assets ($30) + amortization of net loss ($10) + amortization of prior service cost ($5) + amortization of transition obligation ($15) [in millions]

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