Sharpie Corporation has a global workforce of 400 employees. There was a recent negotiation for a pension plan with an effective date of January 1, 2015. The amount of prior service cost for the new pension plan is $4,823,000. The agreement was to fund the cost evenly with annual contributions over a 10-year period. The first payment is due on December 31, 2015, all other payments are due at the end of each year on December 31. The cost is to be amortized over the average remaining service life of covered employees. The discount rate for the funding of the pension plan is 12%. It is assumed that, on the average of 10 employees will retire over the next 40 years.
Requirements:
1. Compute the annual dollar amount Sharpie Corporation will pay to fund is prior service cost.
2. Compute the amortization cost for the year 2022.