Homework Answers
Schedule of amortization of prior service costs using years of service method
| A | B | C = Prior cost / 1,200 | D = B x C | |
| Year | No of employees retire during the year | No of employees worked during the year | Cost per service year | Amortization |
| 2016 | 40 | 400 | 5,000 | 2,000,000 |
| 2017 | 120 | (400 - 40) 360 | 5,000 | 1,800,000 |
| 2018 | 60 | (360 - 120) 240 | 5,000 | 1,200,000 |
| 2019 | 160 | (240 - 60) 180 | 5,000 | 900,000 |
| 2020 | 20 | (180 - 120) 20 | 5,000 | 100,000 |
| 1,200 | 6,000,000 | |||
Notes:
Cost per service year = Prior costs / Sum of number of employees worked during every year
= $6,000,000 / 1,200 = $5,000
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