Frazier Refrigeration amended its defined benefit pension plan on December 31, 2016, to increase retirement benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making the amendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at the rate of approximately 10 each year at the end of each of the next 10 years. Required: 1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in each of the next 10 years. 2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in each of the next 10 years.
Frazier Refrigeration amended its defined benefit pension plan on December 31, 2016, to increase retirement
benefits earned with each service year. The consulting actuary estimated the prior service cost incurred by making
the amendment retroactive to prior years to be $110,000. Frazier’s 100 present employees are expected to retire at
the rate of approximately 10 each year at the end of each of the next 10 years. Required:
1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in
each of the next 10 years.
2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense
in each of the next 10 years.
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