Amortization of Prior Service Cost

Definition: Amortization of Prior Service Cost is the periodic recognition in pension expense of changes to a defined benefit pension plan that grant additiona…

Amortization of Prior Service Cost is the periodic recognition in pension expense of changes to a defined benefit pension plan that grant additional benefits for service rendered in prior periods (e.g., a plan amendment that increases the benefit formula). The unamortized amount is deferred in Accumulated Other Comprehensive Income and amortized to net periodic pension cost over the average remaining service life of active employees expected to receive benefits, under ASC 715.