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What is the journal entry record prior service cost?

Unrecognized prior service cost cannot be reflected in the current year, so the total amount is capitalized and amortized over the remaining service life for the employee. The offset is to other comprehensive income.

The visual below illustrates the journal entry that would be recorded for an employee that had a prior service cost of $100 and a remaining useful service life of 5 years. This would be if the plan was underfunded (pension liability and not a pension asset).

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