Final answer:
The prior service costs of a pension plan should be charged to operations of current and future periods because the benefits from past services are derived during these periods. This aligns with the matching principle of accounting. Defined benefit plans are increasingly rare, often replaced by defined contribution plans like 401(k)s.
Step-by-step explanation:
When a company adopts a pension plan, the costs associated with employees' service rendered in prior periods, known as prior service costs, should be charged to operations of current and future periods. The rationale behind this is that the benefit from employees' services in prior periods will be derived in the current and future periods. Therefore, the correct answer is option (a) operations of current and future periods.
Pension plans, including defined benefit plans, have been more commonly replaced by defined contribution plans, such as 401(k)s and 403(b)s. These newer plans do not have the same prior service cost considerations because the employer's contribution is fixed, and the future retirement benefits depend on the performance of the investments within the individual's retirement account.