Final answer:
The annual amortization of the unrecognized prior service cost to be included in pension expense for 2019 is $2,000, which is calculated by dividing the total prior service cost of $84,000 by the total expected future service years (42 years) of all employees.
Step-by-step explanation:
To calculate the amount of prior service cost that should be included in pension expense for 2019 using the years-of-future-service method of amortization, you would total the expected years of future service for all employees and then divide the unrecognized prior service cost by this total. In this instance:
- Employee A - 3 years
- Employee B - 5 years
- Employee C - 5 years
- Employee D - 6 years
- Employee E - 6 years
- Employee F - 8 years
- Employee G - 9 years
Total future service years = 3 + 5 + 5 + 6 + 6 + 8 + 9 = 42 years
Divide the unrecognized prior service cost of $84,000 by 42 years to find the annual amortization:
$84,000 / 42 years = $2,000 per year
Therefore, $2,000 of prior service cost should be included in pension expense for 2019.