Present Value of Benefit Obligation

The Present Value of Benefit Obligation is suppose to capture the benefits accrue to an employee for the salary he earns throughout his service (past and future).

But when we reconcile the incresae in the present value in the subsequent year, we add a component called Service Cost for the additional year of service that the employee has provided… But wont that be double counting the Service Cost ?


You add the present value of what they earn this year, then increase it each year thereafter for interest.

There’s no double counting.