Question

carla vista corporation amended its pension plan on january 1, 2025, and granted $175,100 of prior service costs to its employees. the employees are expected to provide 2,060 service years in the future, with 370 service years in 2025. compute prior service cost amortization for 2025.

Answer 1

To calculate the prior service cost amortization for Carla Vista Corporation for 2025, divide the total prior service cost by the total service years, then multiply the result by the service years in 2025. The amortization for 2025 amounts to $31,450.

Step-by-step explanation:

To calculate the prior service cost amortization for Carla Vista Corporation for the year 2025, you would divide the total prior service costs by the total service years expected to determine the annual amortization rate. Multiply this rate by the service years for 2025 to find the amortization amount for the year.

Total prior service costs: $175,100

Total service years expected: 2,060

Service years in 2025: 370

First, find the annual amortization rate:

Annual Amortization rate = Total prior service costs / Total service years expected

Annual Amortization rate = $175,100 / 2,060

Annual Amortization rate = $85

Then, calculate the amortization for 2025:

Amortization for 2025 = Annual Amortization rate × Service years in 2025

Amortization for 2025 = $85 × 370

Amortization for 2025 = $31,450