Amortization of prior service cost
Course:- Accounting Basics
Reference No.:- EM13147558

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On January 1, 2010, Krupka LLC amended its pension plan which caused an increase of $6,000,000 in its projected benefit obligation. The company has 400 employees who are expected to receive benefits under the company's defined-benefit pension plan. The personnel department provided the following information regarding expected employee retirements:

Expected Retirements

Number of Employees On December 31

40 2010

120 2011

60 2012

160 2013

20 2014


The company plans to use the years-of-service method in calculating the amortization of prior service cost as a component of pension expense.


Prepare a schedule which shows the amount of annual prior service cost amortization that the company will recognize as a component of pension expense from 2010 through 2014."

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