In Level 1, CFA curriculum Reading 32 (pages 547-548) mentions components of change in Net Pension Plan:
Under IFRS:
Service Costs (including past service costs);
Net Interest Expense = Net Fund position * Discount rate, it’s same as expected return on Assets - accrued interest on obligations, as I understand.
Remeasurement: actuarual gain/loss + (Actual Return on Assets - Expected Return on Assets)
Under US GAAP:
Service Costs
interest expence accrued on beggining pension obligation
expected return on Assets
past service costs
actuarial gain/loss
I was searching on the forum regarding this issue, but I became more confuced. If you have answers regarding thises questions, please explain or paste forum link:
in US GAAP, wich component contains: (Actual Return on Assets - Expected Return on Assets) ?
what is meaning of and difference between 1) prior service costs and 2) actuarial gain/loss, as in CFA curriculim it’s mentioned they change because of assumptions.
Don’t remember exactly, but as far as I remember, there is no difference in categorization of cost between IFRS and USGAAP, so (Actual Return on Assets - Expected Return on Assets) would also be categorized as Remeasurement in USGAAP as well.
prior service costs= Past-service costs= change PV(obligation) in prior periods, e.g., change in plan conditions: amendment (introduction/withdrawal/changes plan) or a curtailment (a significant reduction # employees covered)
actuarial gain/loss has two components
Actuarial assumptions (estimates on future events regarding a person eligible under a defined benefit pension scheme, such as date of death, future salary/career development, interest development etc) – actual experience (actual events regarding a person eligible under a defined benefit pension scheme, such as date of death, actual salary/career development, interest development etc)
Changes in input (updates of life expectancy statistics etc).