I came across a problem that I pretty much understand but with 1 question- basically it asked for a calculation of reported pension expense on the IS if assuming IFRS…the calculation came out to be current service cost + interest cost + full amortization of past service cost…but in the problem we were given ‘expected return on plan assets’…shouldn’t this always offset ‘reported pension expense’ under US GAAP & IFRS? In other words - expected return IS a part of the periodic pension expense as reported on P&L formula right??
thanks!
Yes: expected return reduces pension expense.
Note, however, that IFRS doesn’t use the term “expected return on plan assets”. The expected rate of return on plan assets is de facto the discount rate for plan liabilities, and the expected return amount is deducted from the interest expense on plan liabilities to arrive at _ net _ interest expense.
ahh yes- thank you so much!!
Separate question-
under the acquisition method, is the current ratio post-aquisition reduced by cash paid (its numerator I mean)? I know we combine all the assets and liabilities to the parent’s balance sheet, but what if the change to equity? And shouldn’t the new A level as reported by the parent be ‘parents starting assets+sub’s assets-cash paid’?
Thanks,