Runners, Inc. has a defined-benefit pension plan covering its 50 employees. Runners agrees to amend its...

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Runners, Inc. has a defined-benefit pension plan covering its 50 employees. Runners agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,700,000. Runners determined that all of its employees are expected to receive benefits under the amended plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year after the plan is amended. Assuming that Runners uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the plan is amended is a. $540,000. b. $270,000. c. $720,000. d. $900,000. Runners, Inc. has a defined-benefit pension plan covering its 50 employees. Runners agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,700,000. Runners determined that all of its employees are expected to receive benefits under the amended plan over the next 5 years. In addition, 10 employees are expected to retire or quit each year after the plan is amended. Assuming that Runners uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the plan is amended is a. $540,000. b. $270,000. c. $720,000. d. $900,000.

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Option D is the correct answer If the employees are going to retire according to a fixed pattern eac... View the full answer