Question

Culver Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2020 are as follows. Employee Future Years of Service Jim 3 Paul 4 Nancy 5 Dave 6 Kathy 6 On January 1, 2020, the company amended its pension plan, increasing its projected benefit obligation by $86,400. Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules. Year Annual Amortization 2020 $enter a dollar amount 2021 enter a dollar amount 2022 enter a dollar amount 2023 enter a dollar amount 2024 enter a dollar amount 2025 enter a dollar amount

Answer 1

Answer: Please see below for answer

Step-by-step explanation:

Employee Future Years of Service

Jim 3

Paul 4

Nancy 5

Dave 6

Kathy 6

Total years of service = 24

increase in projected benefit obligation = $86,400

Cost per year = $86,400/ 24 =$3,600

Year 2020, jim =1 paul=1, nancy=1 dave=1 Kath=1

total years=5

cost per year= $3,600

amortization for Year 2020 5x3600= $18,000

Year 2021, jim =1 paul=1, nancy=1 dave=1 Kath=1

total years=5

cost per year= $3,600

amortization for Year 2021 5x3600= $18,000

Year 2022, jim =1 paul=1, nancy=1 dave=1 Kath=1

total years=5

cost per year= $3,600

amortization for Year 2022= 5x3600= $18,000

Year 2023, jim =0 paul=1, nancy=1 dave=1 Kath=1

total years=4

cost per year= $3,600

amortization for Year 2023 =4x3600= $14,400

Year 2024, jim =0paul=0, nancy=1 dave=1 Kath=1

total years=3

cost per year= $3,600

amortization for Year 2024= 3x3600= $10,800

Year 2025, jim =0paul=0, nancy=0 dave=1 Kath=1

total years=2

cost per year= $3,600

amortization for Year 2025= 2x3600= $7,200