Larkspur 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 $80,640.
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) |
| Year | Jim | Paul | Nancy | Dave | Kathy | Total |
| 2020 | 1 | 1 | 1 | 1 | 1 | 5 |
| 2021 | 1 | 1 | 1 | 1 | 1 | 5 |
| 2022 | 1 | 1 | 1 | 1 | 1 | 5 |
| 2023 | 1 | 1 | 1 | 1 | 4 | |
| 2024 | 1 | 1 | 1 | 3 | ||
| 2025 | 1 | 1 | 2 | |||
| Total | 3 | 4 | 5 | 6 | 6 | 24 |
| Cost per Service-Year | 3360 | =80640/24 | ||||
| Year | Annual Amortization | |||||
| 2020 | 16800 | =3360*5 | ||||
| 2021 | 16800 | =3360*5 | ||||
| 2022 | 16800 | =3360*5 | ||||
| 2023 | 13440 | =3360*4 | ||||
| 2024 | 10080 | =3360*3 | ||||
| 2025 | 6720 | =3360*2 |
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