FRA Topic Test Atlantic Presser - TPPC

CFA Level II FRA
#1

Hope everyone’s studying is going well! I need some help. To my understanding TPPC is the same for US GAAP and IFRS:

  • Current service cost

  • Past service cost

  • Interest cost

  • Actual ROA

-/+ Ac. G/L

In this topic test one of the items in the Balance Sheet is “amortization of past service costs” and it’s excluded for the equation above, essentially only involving current cost, interest cost, and actual ROA as -/+ Ac. G/L isn’t present. What’s the rationale behind the treatment of amortization of past service cost and why isn’t it included?

#2

Amortization of past service costs are only used under GAAP. Is the company reporting using IFRS? If so, that’s why.

#3

Company is reporting under US GAAP but that amortization of past service costs was excluded form the equation. The final equation for TPPC under US GAPP reporting read: CURRENT COST + INTEREST COST - ACTUAL ROA. Why did we omit amortization of past service costs?

#4

Amortization of prior service costs is part of pension expense under US GAAP but it’s not part of pension _ cost _; the prior service costs are included when they were incurred, not when they’re amortized.

#5

With pension expense being a part of pension cost (TPPC) ?