Lily City uses a pay-as-you-go approach for funding postemployment benefits other than pensions. The city reports no other post employment benefits (OPEB) liability at the beginning of the year. At the end of the year, Lily City reported the following information related to OPEB for the water enterprise fund:
Benefits paid: $100,000Annual required contribution $500,000
Unfunded actuarial accrued liability $800,000
What amount of expense for OPEB should Lily City's water enterprise fund report in its fund level statements?
a) $100,000
b) $500,000
c) $600,000
d) $1,400,000
Answer: B
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