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Waddle Company amended its defined benefit pension plan on January 1, 2024, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at

Waddle Company amended its defined benefit pension plan on January 1, 2024, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years.

Required:

  1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in 2024.

  2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in 2024.


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Answer #1

2024-2031

80(year 2024)+70+60+50+40+30+20+10(yr 2023)= 360

1) 216,000*80/360=48,000 answer


2) 216,000/8yrs= 27,000 answer

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