Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2014 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees expect to receive the increased benefits. Shown below is a schedule of the employees and their expected years of future service:

Required:
Using the straight-line method:
a.Compute the average remaining service life.
b.Determine the amount of unrecognized prior service cost to be included in the 2014 pension expense calculation.

Question

Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2014 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees expect to receive the increased benefits. Shown below is a schedule of the employees and their expected years of future service:

Required:
Using the straight-line method:
a.Compute the average remaining service life.
b.Determine the amount of unrecognized prior service cost to be included in the 2014 pension expense calculation.

Quizplus · Accepted Answer

The Answer of Martha Co. has a defined benefit pension plan for its employees. The plan was amended at the beginning of 2014 which increased benefits based on services rendered by certain employees in prior periods. The actuary has reported that unrecognized prior service cost resulting from the amendment is $385,000. Five employees expect to receive the increased benefits. Shown below is a schedule of the employees and their expected years of future service:

Required:
Using the straight-line method:
a.Compute the average remaining service life.
b.Determine the amount of unrecognized prior service cost to be included in the 2014 pension expense calculation.

Martha Co Has a Defined Benefit Pension Plan for Its Employees