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Exercise 20-05 Ivanhoe Company has five employees participating in its defined benefit pension plan. Expected years...

Exercise 20-05

Ivanhoe 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 $84,960.

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

2021

2022

2023

2024

2025
Business   Accounting   
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Answer #1
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 3540 =84960/24
Year Annual Amortization
2020 17700 =3540*5
2021 17700 =3540*5
2022 17700 =3540*5
2023 14160 =3540*4
2024 10620 =3540*3
2025 7080 =3540*2
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