So there is this example on page 112 of schweser notes , book 2. The job is to adjust the GAAP income statement to IFRS.
1.What is done in the solution is pension expence( calculated using expected return and not actual return, understandable) is added to the operating income
2.service cost is subtracted from the operating income
3.interest cost is added to the interest expence
4.ACTUAL return in added to the other income.
What i think should be correct is:
1.add back the pension expence( similar to the lst first step) to the operating income
2.subtract service cost from operating income
3.ADD INTEREST COST MINUS EXPECTED RETURN TO THE INTEREST EXPENCE( THATS HOW IT IS REPORTED IN IFRS)
the difference between actual and expected return must have been already reported in the actualrial gains and losses under OCI
What am i missing?