Amortization of Prior Service Cost

On January 1, 2013, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,920,000 on that date (which it did not fund).

Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2013:

Expected Years of Future Service Employee 4 Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2013 and 2014: st for 2013 and 2014 2013 2014 Service cost Interest cost on projected benefit obligation Expected return on plan assets Baznik contributed $1,374,800 and $1,328,000 to the pension fund at the end of 2013 and 2014, respectively. $750,000 $811,000 172,800 255,852 137,480