Wolz Company, a small business, has had a defined benefit pension plan for its employees for several years. At the beginning of 2007 the company amended the pension plan; this amendment provides for increased benefits based on services rendered by certain employees in prior periods. The company’s actuary has determined that the related unrecognized prior service cost amounts to $140,000. The company 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 Expected Years of

Numbers Future Service

1 .........2

2 .........3

3 .........4

4 .........5

Required

1. Using the straight-line method, 

(a) Compute the average remaining service life, and 

(b) Prepare a schedule to amortize the unrecognized prior service cost.

2. Using the years-of-future-service method instead, prepare a set of schedules to determine 

(a) The amortization fraction for each year, and 

(b) The amortization of the unrecognized prior service cost.