Question

Mancuso Corporation amended its pension plan on January 1, 2020, and granted $160,000 of prior service costs to its employees. The employees are expected to provide 2,000 service years in the future, with 350 service years in 2020. Compute prior service cost amortization for 2020.

Answer 1

Answer: $28000

Explanation:

Based on the information given in the question, the prior service cost amortization for 2020 will be calculated thus:

= (Prior Service Costs / Service Years in Future) x Service Years in 2020

= ($160,000 / 2,000) × 350

= $80× 350

= $28,000

Therefore, the the prior service cost amortization for 2020 is $28000.