Waddle Company amended its defined benefit pension plan on January 1, 2013, to increase retirement benefits earned with each service year. The actuary estimated the prior service cost to be $216,000. Waddle's 80 present employees are expected to retire at the rate of about 10 each year at the end of each of the next eight years.
Required:
1. Using the service method, calculate the amount of prior service cost to be amortized to pension expense in 2013.
2. Using the straight-line method, calculate the amount of prior service cost to be amortized to pension expense in 2013.