Question
On January 1, 2018, Derek Co.s defined benefit pension plan had plan assets with a fair value of $750,000, and a projected benefit obligation of
On January 1, 2018, Derek Co.s defined benefit pension plan had plan assets with a fair value of $750,000, and a projected benefit obligation of $875,000. In addition:
Actual and expected return on plan assets 7%
Interest cost 9%
Service costs - $24,000
Unamortized prior service cost - $120,000
Employer contributions to the plan - $45,000
Distributions to employees from the plan - $60,000
Unamortized prior service cost is being amortized over the expected remaining service lives of covered employees, which consists of a total of 9 employees:
2 employees are each expected to have 9 years remaining
3 employees are each expected to have 6 years remaining
4 employees are each expected to have 1 year remaining
How much amortization of prior service cost will be included in Derek Co.s pension expense for 2018?
Multiple Choice
$13,333
$27,000
$7,500
$0
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