89. Rathke, Inc. has a defined benefit pension plan covering its 50 employees. Rathke agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,700,000. Rathke determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year. Assuming that Rathke uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is a. $540,000. b. $900,000. c. $270,000. d. $720,000. Accounting for Pensions and Postretirement Benefits 19-21 Ans: B, LO: 3, Bloom: AP, Difficulty: Moderate, Min: 4, AACSB: Reflective, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation AICPA PC: Problem Solving, IMA: Reporting, IFRS: None