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:

Flexible Retirement

Programs that provide retirees with the opportunity to work after they have retired and provide them with significant flexibility in terms of how they work, what they work on, when they work, and where.

Position Vacancy

An unoccupied job or role within an organization that is open for recruitment.

Mandatory Retirement

A policy or practice that requires employees to retire at a certain age, regardless of their desire or ability to continue working.

Human Resource Audits

A comprehensive method of objectively and systematically assessing the effectiveness of an organization’s HR policies and procedures.