Net Periodic Cost vs Total Perdiodic Cost vs Periodic Cost: IFRS & GAAP

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Rahat Amin

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Referring to CFAI Mock: PM question: 23 and 24:
Where we need to calculate Periodic Pension Cost (Q:23) and Total Periodic Cost (Q:24). However, dont they are actually represent the same thing?
They said that:
(i) Periodic Pension Cost (GAAP)= Current Service Cost+ Interest Cost+ Amortization of Past Service Cost -Expected Return on Plan Asset
(ii) Total Periodic Cost (GAAP)= Current Service Cost+ Interest Cost- Actual Return on Plan Asset
= Change in Funded Status+ Employer’s Contribution
I think (i) should be equal to (ii) ……..Any difference in IFRS? Please clarify.
 
Periodic pension cost (GAAP) P&L = Current service cost + interest cost - expected return on plan assets + amortization of past service cost + amortization of actuarial gains and losses.
Periodic pension cost (IFRS) P&L = Current service cost + past service cost +/- Net interest cost.
Total periodic pension cost (IFRS & GAAP) = Employer’s contribution - (Change in the funded status).
Total periodic pension cost (IFRS & GAAP)= Current service cost + interest cost + past service cost +/- actuarial gains and losses - Actual return on plan asset.
 
data storm wrote:
Periodic pension cost (IFRS) P&L = Current service cost + past service cost +/- Net interest cost.
Click to expand...
Can you please elaborate +/- Net interest cost ?
 
Sure, i mean its calculated as follows ( Beginning Net funded status * discount rate )
because, under Us. gaap you calculate the interest cost - expected return on plan asset independently.
 
If I remember correctly, it is calculated as discount rate*begining funded status (ie. Plan assets-PVBO). So if assets>PVBO net interest cost is positive?
 
it would be net interest income and you will deduct this amount from current period costs.
 
Yeah, thought so too. All this straightforward stuff jumbling up due to anxiety. Thanks.
 
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