Question

Bridgeport 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 $87,120. Compute the amount of prior service cost amortization for the years 2020 through 2025 using the years-of-service method, setting up appropriate schedules.

Answer 1

Answer:Please see answers in explanation column

Explanation:

Cost per service year = obligation From benefit / Total years of service

Total years of service= 3+4+5+6+6=24

Cost per service year =$87,120/24 =$3,630

Year  Jim  Paul  Nancy  Dave  Kathy Total × Cost  Amortization

2020   1       1         1             1          1      5    × $3,630      $18, 150

2021   1      1         1              1          1      5     ×  $3,630$     $18, 150

2022   1       1         1             1          1      5    ×  $3,630        $18, 150

2023            1        1              1          1    4     ×  $3,630         $14, 520

2024                     1              1          1     3     ×   $3,630        $10,890

2025                                   1          1      2    ×    $3,630         $7,260

Total                                                                       $87,120.