Prior service cost is recognized as pension expense over a period of several years.

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Prior service cost represents the increase in pension benefits that results from plan amendments or changes in the plan formula that apply retroactively to periods of service by employees. This cost is recognized as pension expense over a period of several years (known as the amortization period) and is included in the calculation of the company's pension expense or income.

Prior Service Cost Is Recognized as Pension Expense Over a Period