When the Service Method Is Used for Amortizing Prior Service

question 226

Multiple Choice

When the service method is used for amortizing prior service costs, the amount recognized each year is:

• A) In proportion to the fraction of the total remaining service years worked during the year.
• B) A constant amount or fixed amount.
• C) Prior service cost divided by the average remaining service life of the active employee group.
• D) Prior service cost divided by the average estimated retirement age of the currently enrolled employee group.

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Definitions:

Intrinsic Motivation

The drive to perform a task due to inherent satisfaction or enjoyment, rather than external pressures or rewards.

Extrinsic Rewards

Rewards given to an individual that are external to the job itself, such as pay, bonuses, or other tangible benefits.

Self-Actualization Need

The desire for self-fulfillment and realizing one's own potential, as the highest level in Maslow's hierarchy of needs.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that suggests human needs are arranged in a hierarchy from basic physiological needs to self-actualization.