Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $133,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Expected Years of Future Service Employee Numbers 1 2 2 3 3 4 4 5 Required: 10. Using the straight line method, compute the average remaining service life. If required, round your answer to one decimal place. 3.5 Years 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place. 3.5 V years Feedback 1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost, Enter all amounts as positive numbers. WOLZ COMPANY Prior Service Cost Amortization 2019-2022 Amortization Remaining Prior Service to Increase Prior Service Cost Pension Expense 2019 Total Cost 2020 2021 2022 Feedback 2a. Using the years-of-future-service method Instead, prepare a set of schedules to determine the amortization fraction for each year. Enter the amortization fraction as a fraction. For example: 3/10 WOLZ COMPANY Years of Future Service Amortization Fractions 26. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization of the prior service cost. Enter all amounts as positive numbers. WOLZ COMPANY Years of Future Service Prior Service Cost Amortization Total Amortization Remaining Prior Service Amortization to Increase Prior Service Cost Fraction Pension Expense Cost 2019 4/14 4/16 2020 2021 2022 2/14 2023 1/14 Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $133,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Employee Expected Years of Numbers Future Service 1 2 3 2 3 4 4 5 Required: 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place. 3.5 years Feedback Check My Work To compute the straight-line amortization of prior service costs, you should first calculate the average remaining service life of the is consider what years of service should be included when computing the average remaining service life of the cs. Consider what years of service should be included when computing the average remaining service in participating employees. 1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost. Enter all amounts as positive numbers, WOLZ COMPANY Prior Service Cost Amortization 2019-2022 Total Amortization Remaining Prior Service to Increase Prior Service Cost Pension Expense Cost 2019 2020 2021 2022 Feedback Check My Work Consider the effect the amortization of the prior service cost has of the pension expense. Be sure to update the remaining riors for each year. each year En the effect the amortization of the prior service cost has on the pension expense. Be sure to update the remaining prior service for each year. 2 a. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization fraction for each year to the amortization fraction as a fraction. For example: 3/10. WOLZ COMPANY Years of Future Service Amortization Fractions Expected Number of Number of Number of Number of Number of Years of Service Years Service Years Service Years Service Years Service Years Future Service Rendered in 2019 Rendered in 2020 Rendered in 2021 Rendered in 2022 Rendered in 2023 1 2 1 2 3 1 1 w N 3 4 1 1 4 5 1 1 1 1 4 3 I Total 4/14 314 2714 9/14 Amortization fraction Feedback Check My Work aling employee who is expected to receive future benefits under the plan. NOWO 2 b. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization of the prier service contest amounts as positive numbers. WOLZ COMPANY Years of Future Service Prior Service Cost Amortization Total Amortization Remaining Prior Service Amortization to Increase Prior Service Cost Fraction Pension Expense Cost 2019 $ 4/14 4/14 2020 2021 3/14 2022 2/14 2023 1/14 Feedback Check My Work Consider the effect the amortization of the prior service cost has on the pension expense. Be sure to update the remaining per services for each year
