Unrecognized prior service cost would be reported on the balance sheet and affect the amount(s)reported for

Question

Quizplus · Accepted Answer

Unrecognized prior service cost is a component of pension cost that arises due to amendments made to a pension plan that increases pension benefits for employees retroactively. This cost is not immediately recognized on the income statement but is instead reported on the balance sheet as a component of accumulated other comprehensive income (AOCI) or as a prepaid/accrued pension cost. Therefore, unrecognized prior service cost affects both the accrued/prepaid pension cost and accumulated other comprehensive income reported on the balance sheet.

Unrecognized Prior Service Cost Would Be Reported on the Balance