What are the components of net periodic postretirement benefit cost under US GAAP?

Net periodic postretirement benefit cost under US GAAP is determined by several key components that reflect the overall cost of providing these benefits over time. The correct answer incorporates service cost, interest cost, and return on plan assets, which are crucial for evaluating the total cost associated with postretirement benefits.

Service cost represents the value of benefits earned by employees for service rendered during the period. This is a vital part of the calculation, as it measures the cost related to the current period's employee service.

Interest cost reflects the increase in the projected benefit obligation due to the passage of time, essentially accounting for the time value of money. As the benefit payments are due in the future, recognizing interest cost helps in understanding how much those future obligations are worth today.

Return on plan assets represents the earnings generated on the investments made by the company to fund the postretirement benefits. It is subtracted from the total cost since a higher return on these assets reduces the overall expense that the company has to recognize.

The other options do not capture the full scope of the necessary components to determine net periodic postretirement benefit cost under US GAAP. For instance, administrative fees are not one of the primary components; while they are relevant for overall plan management, they