Why company amortizes the prior service cost


Solve the following problem:

Raspberry Company's actuary has computed its prior service cost to be $8,000,000. The company amortizes the prior service cost by the straight-line method over the remaining 20-year service life of its active employees. During the current year, the company also recognizes service cost of $560,000 and interest cost of $100,000. At the beginning of the year, the plan assets were $1,500,000, and the company expects to earn 10% on its plan assets.

Compute Raspberry Company's pension expense for the current year.

Solution Preview :

Prepared by a verified Expert
Financial Accounting: Why company amortizes the prior service cost
Reference No:- TGS02105338

Now Priced at $20 (50% Discount)

Recommended (96%)

Rated (4.8/5)