Question

Bonita Company has five employees participating in its defined benefit pension plan. Expected years of future...

Bonita Company has five employees participating in its defined benefit pension plan. Expected years of future service for these employees at the beginning of 2017 are as follows.

Employee

Future Years of Service

Jim 3
Paul 4
Nancy 5
Dave 6
Kathy 6

On January 1, 2017, the company amended its pension plan, increasing its projected benefit obligation by $87,840.

Compute the amount of prior service cost amortization for the years 2017 through 2022 using the years-of-service method, setting up appropriate schedules.

Year

Annual Amortization

2017 $
2018
2019
2020
2021
2022

Homework Answers

Answer #1
Year Jim Paul Nancy Dave Kathy Total
2017 1 1 1 1 1 5
2018 1 1 1 1 1 5
2019 1 1 1 1 1 5
2020 1 1 1 1 4
2021 1 1 1 3
2022 1 1 2
Total 3 4 5 6 6 24
Cost per Service-Year 3660 =87840/24
Year Annual Amortization
2017 18300 =3660*5
2018 18300 =3660*5
2019 18300 =3660*5
2020 14640 =3660*4
2021 10980 =3660*3
2022 7320 =3660*2
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