Periodic pension cost in P/L under IFRS

CFA Level II FRA
#1

Hi to all,

I am looking at Schweser notes to understand the difference between gaap and ifrs for reporting periodic pension cost in income statement. Under ifrs they add “net interest cost” which is the discount rate * beginning funded status as Gaap add interest cost which is discount rate* beginning PBO.

How is it it is not the same calculation?

Thanks.

#2

US GAAP also subtracts the expected return on plan assets. Because under IFRS you have to use the same rate for the expected return on plan assets as you use for the discount rate on the plan liabilities, you can get the two calculations (interest cost less expected return) by netting the assets and then multiplying by the discount rate.

#3

Excellent. Thank you S2000magician!

#4

My pleasure.