On 1/1/20 Company ABC started a defined benefit pension plan. On that date, the company granted retroactive benefits to its 170 employees. The actuaries estimated the cost of these benefits to be $ 105,000. Management is trying to select a method to amortize prior period service cost (PSC). 

The first option (Option A), favored by the FASB, is the years of service method. This method provides a total of 510 years of service. The second option (Option B) is to use straight line depreciation based on the average number of years of employee service.

a. Option A

b. Option B

c. The method selected never affects the computation of net income.

d. Both options will generate the same net income.