adjusted operating income

[archived_user]

If we want to adjust operating income for a firm that reports their entire pension expense as operating, we add back pension expense to reported operating income (which makes sense to me)…but why then do we subtract service cost? Isn’t that the PV of benefits earned in the current period? What the logic there?
Thanks,

 

[archived_user]

Because service costs are not part of a company’s primary operations.
Interest costs on the other hand are payments that are regarded as CFO.
I might be wrong here. This is just my understanding of it.

 

[archived_user]

I think you are right about that’s why we subtract service cost in this case- I think I was just hung up on understanding the formula but in this case I may have just forgotten we want OPERATING income only…thanks!