Question

Indigo Corporation amended its pension plan on January 1, 2017, and granted $166,000 of prior service costs to its employees. The employees are expected to provide 2,000 service years in the future, with 340 service years in 2017. Compute prior service cost amortization for 2017. Prior service cost amortization for 2017

Answer 1

$28,231.30

Step-by-step explanation:

The average time until retirement of the employees = 2,000/340

The average time until retirement of the employees = 5.88 years

Prior service cost amortization for 2017 = Prior service costs to its employees/The average time until retirement

Prior service cost amortization for 2017 = $166,000/ 5.88

Prior service cost amortization for 2017 = $28231.2925170068

Prior service cost amortization for 2017 = $28,231.30