Crane, Inc. received the following information from its pension plan trustee concerning the operation of the company's defined-benefit pension plan for the year ended December 31, 2021: January 1, 2021December 31, 2021 Projected Benefit Obligation$2,630,000$2,980,000 Plan Assets$1,380,000$1,730,000 Accumulated Prior Service Cost - OCI$553,000$306,500 The service cost component for 2021 is $146,500 and the amortization of prior service cost is $246,500. What is the journal entry to record the amortization of prior service cost

Crane, Inc.

Journal Entry on December 31, 2021

Debit Amortization of Prior Service Cost $246,500

Credit Accumulated Prior Service Cost - OCI $246,500

To record the amortization expense of prior service cost.

Explanation:

a) Data and Calculations:

                                                       January 1, 2021    December 31, 2021

Projected Benefit Obligation             $2,630,000                $2,980,000

Plan Assets                                          $1,380,000                 $1,730,000

Accumulated Prior Service Cost - OCI $553,000                  $306,500

Service cost component for 2021 = $146,500

Amortization of prior service cost = $246,500

b) Crane, Inc. must recognize the Amortization of Prior Service Cost in other comprehensive income as incurred and then as a component of the accumulated other comprehensive income in the company's balance sheet. The Accumulated Prior Service Cost account is then allocated (amortized) to pension expense over the service period of affected employees.

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