Amortizing prior service cost for pension plans will:

Question

Quizplus · Accepted Answer

Amortizing prior service cost for pension plans means recognizing a portion of the past pension costs as an expense in the current period rather than recognizing the entire amount at once. This will decrease the company's retained earnings as the expense will be subtracted from the net income. At the same time, it will increase the accumulated other comprehensive income as the prior service cost component of the plan's net gain or loss will be included in the balance. Therefore, the correct answer is D, which states that amortizing prior service cost will decrease retained earnings and increase accumulated other comprehensive income.

Amortizing Prior Service Cost for Pension Plans Will