[question removed by moderator]
(Institute 113)
Institute, CFA. 2017 CFA Level II Volume 2 Financial Reporting and Analysis. CFA Institute, 07/2016. VitalBook file.
Why was the past service cost added to the current service cost? I don’t seem to get the logic behind this. My assumption is that we only need the current service cost to compute for the total benefits paid for the year.
Because under IFRS you expense the past service cost in the period it is recognised.
Under US GAAP, assuming the past service cost is amortised over the average service life, you only expense the amortised portion.
So the above is probably in relation to IFRS…
^
I remember something from level 1 along the lines of “Assume IFRS is used unless GAAP is explicitly stated”
Years ago the default accounting standards assumption was US GAAP.
CFA Institute is trying to be more global; today the default accounting standards assumption is IFRS.
Nevertheless, on the real exam they’re likely to state explicitly which standards a company uses.
Got it. Thanks everyone!