At the beginning of Year 1, Cactus Company has three employees: A, B, and C. Employee A has 3 expected years of future service. Employee B has 4 expected years of future service, and Employee C has 5 expected years of future service. Using the year-of-future-service method, compute the amortization fraction for Years 1 through 5 that Cactus would use to amortize its prior service cost.
Calculate the amortization fraction for each year which the company would use to amortize the prior service cost.
Pension plan: Pension plan is the plan devised by corporations to pay the employees an income after their retirement, in the form of pension.
Prepare a schedule to calculate the amortization fraction for each year as follows:
Employee | Expected years of future service | Number of service years rendered in each year | |||||
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Tot... |
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