Straight-Line Amortization
Response to the following problem:
At the beginning of 2010, the Brent Company amended its defined benefit pension plan. The amendment entitled five active participating employees to receive increased future benefits based on their prior service. The company's actuary determined that the prior service cost for this amendment amounts to $330,000. Employee A is expected to retire after one year, employee B after two, employee C after three, employee D after four, and employee E after five years.
Required
Using the straight-line method, (1) compute the average remaining service life, and (2) prepare a schedule to amortize the prior service cost.