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Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $140,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Employee Numbers 1 2 3 Expected Years of Future Service 2 3 4 in

Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $140,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Employee Numbers 1 2 3 Expected Years of Future Service 2 3 4 in

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1 Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $140,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Employee Numbers 1 2 3 4 2019 2020 2021 2022 Expected Years of Future Service 2 3 Show Transcribed Text Total Prior Service Cost 4 5 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place. years 1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost. Enter all amounts as positive numbers. WOLZ COMPANY Prior Service Cost Amortization 2019-2022 Amortization Fraction Remaining Prior Service Cost
Transcribed Image Text:1 Methods to Amortize Prior Service Cost Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2019, Wolz amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. Wolz's actuary has determined that the related prior service cost amounts to $140,000. Wolz has four participating employees who are expected to receive the increased benefits. The following is a schedule identifying the employees and their expected years of future service: Employee Numbers 1 2 3 4 2019 2020 2021 2022 Expected Years of Future Service 2 3 Show Transcribed Text Total Prior Service Cost 4 5 1 a. Using the straight-line method, compute the average remaining service life. If required, round your answer to one decimal place. years 1 b. Using the straight-line method, prepare a schedule to amortize the prior service cost. Enter all amounts as positive numbers. WOLZ COMPANY Prior Service Cost Amortization 2019-2022 Amortization Fraction Remaining Prior Service Cost
2 a. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization fraction for each year. Enter the amortization fraction as a fraction. For example: 3/10. 1 2 3 4 Total Amortization fraction Show Transcribed Text Expected Years of Future Service 2019 2020 2021 2022 2023 Total Prior Service Cost Number of Service Years Rendered in 2019 Amortization Fraction WOLZ COMPANY Years of Future Service Amortization Fractions Number of Service Years Rendered in 2020 2 b. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization of the prior service cost. Enter all amounts as positive numbers. WOLZ COMPANY Years of Future Service Prior Service Cost Amortization 3 Amortization Remaining to Increase Prior Service Pension Expense Cost Number of Service Years Rendered in 2021 Number of Service Years Number of Service Years Rendered in 2022 Rendered in 2023
Transcribed Image Text:2 a. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization fraction for each year. Enter the amortization fraction as a fraction. For example: 3/10. 1 2 3 4 Total Amortization fraction Show Transcribed Text Expected Years of Future Service 2019 2020 2021 2022 2023 Total Prior Service Cost Number of Service Years Rendered in 2019 Amortization Fraction WOLZ COMPANY Years of Future Service Amortization Fractions Number of Service Years Rendered in 2020 2 b. Using the years-of-future-service method instead, prepare a set of schedules to determine the amortization of the prior service cost. Enter all amounts as positive numbers. WOLZ COMPANY Years of Future Service Prior Service Cost Amortization 3 Amortization Remaining to Increase Prior Service Pension Expense Cost Number of Service Years Rendered in 2021 Number of Service Years Number of Service Years Rendered in 2022 Rendered in 2023
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