Exercise 20-5 Sarasota Company has five employees participating in its defined b

Question

Exercise 20-5
Sarasota 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 $76,320.

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

Exercise 20-5 Sarasota 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 Future Years of Service Employee Jim Paul Nancy Dave Kathy 4 6 6 On January 1, 2017, the company amended its pension plan, increasing its projected benefit obligation by $76,320 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

Explanation / Answer

Years 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 3 4 5 6 6 24 Cost per Service-Year=76320/24= $3180 Annual amortization 2017 15900 =3180*5 2018 15900 =3180*5 2019 15900 =3180*5 2020 12720 =3180*4 2021 9540 =3180*3 2022 6360 =3180*2

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