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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2010, the company amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. The company’s actuary has determined that the related prior service cost amounts to $140,000. The company has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service:
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Required
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1. Using the straight-line method, (a) compute the average remaining service life, and (b) prepare a schedule to amortize the prior service cost.
2. Using the years-of-future-service method instead, prepare a set of schedules to determine (a) the amortization fraction for each year, and (b) the amortization of the prior service cost
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