# periodic pension cost

hello, In the mock exam there is two things that i cannot differentiate :

Periodic pension cost in income statement = current service cost + intereste cost on obligation - expected return on asset + amortization of past service cost

&

Total periodic cost = service cost + interest cost - actual return on plan asset .

Can somebody explain me the differences ?

Thx

I had related question, i.e., if amortization of past service costs is only part of PPC calculation and not TPPC?

I came across this after googling https://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91320160

so from my understanding both TPPC and PPC are the same and the values are the same under both IFRS and US GAAP, but the difference is how they are stated in financial statements, because some components of PPC can be recognized as pension expense which is included in Income Statement and other components are included in OCI.

see below

Total periodic cost = service cost + interest cost - actual return on plan asset

= changes in net plan liability or asset adjusted for employee contribution.

However, only

• service costs (both current and past) and net interest income/expense under IFRS

• current service costs, expected return on plan assets, interest expense on pension obligation under US GAAP

are expensed in I/S and

• remeasurements bypass I/S and go straight to OCI (and subsequently amortized)

One is total cost incurred during a year

The other is the amount expensed in I/S

total cost is split between I/S and OCI

When asked how much is expensed in I/S?

you need to consider +/- from OCI (amortization from previous years)

can some one please correct me, since in IFRS both “actuarial G/L” , “interest cost” and “diff in actual and expected return” are combined as “net interest income/expense” So the formula for PPC in PL for IFRS would always be:

current service cost + past service cost + net interest income/expense

For GAAP: current service cost + past service cost + interest cost +actuarial G/L - expected return

Periodic pension cost in income statement:

IFRS:

Current service cost + past service cost + net int expense - net int income

GAAP:

current service cost + int exp - int income - expected return on plan asset