When a business organisation changes its benefit commitment, it incurs a fee known as a "prior service cost." Straight-line accounting should be used to record the organization's historical service costs.
What is prior service costs?
- Prior service cost is the price incurred for extra benefits awarded through a pension plan change.
- This expense relates to staff services provided during earlier time periods.
- A small number of individuals who left military active duty, the Guard, or the Reserve can enlist in the Air Force on a full-time basis under the prior service programme.
Is prior service cost a debit or credit?
- Cost of previous service (credit) Plan modifications that raise (lower) rewards for services given in earlier periods result in prior service cost (credit).
- The benefit obligation as of the date the amendment is adopted is used to calculate it.
When a business organisation changes its benefit commitment, it incurs a fee known as a "prior service cost." Straight-line accounting should be used to record the organization's historical service costs.
To know more about prior service cost, visit:
https://brainly.com/question/28522039
#SPJ4
