What is the difference between Total Periodic Pension cost and Periodic Pension expense?
The tppc is the actual pension expense while the periodic pension expense is what’s reported on P&L (and that differs between USGAAP and IFRS).
Tppc includes the oci expense, which is missing from P&L.
Let make sure that I understand it properly,
Total periodic pension plan (it is the sum of pension cost in I/S+OCI) which is net funded status-employer contribution
Periodic Pension cost in I/S includes, service cost, interest expense, post service cost,
Periodic Pension cost in OCI includesgain or loss, and actual return on plan assets.
So going back to my question, based on what I have understood from the discussion I have adjusted my question, is it correct that way?
Periodic formula is incorrect.
what is the correct one!
Periodic Pension Cost:
USGAAP: Current Service Cost + Interest - Expected Growth of Pension Assets + Amortization due to corridor rule
IFRS: Current Service Cost + Past Service Cost + Net Interest Cost
I think you wrote the formulas for Periodic Pension Expense (not cost), right?
I consider the word cost and expense the same.
TPPC = total periodic pension cost/expense
PPC = periodic pension cost/expense and it is basically what is reported in P&I
Cost and expense are most definitely _ not _ the same.
Pension expense is the portion of the pension cost that goes on the income statement, the rest going to OCI.
Ah, I guess I never paid attention to that word. So I guess change what I wrote to:
TPPC = total periodic pension cost
PPE = periodic pension expense and it is basically what is reported in P&I
Hmm… Just reviewed Bostom CFA mock and they refer the periodic pension cost as cost, not expense. The question was referring to P&L reported via USGAAP and IFRS. Then looked it up in Schweser, and their the example in the Pension section, asks to calculate:
- Total periodic pension cost.
- Periodic pension cost reported in P&L under U.S. GAAP (ignore amortization of past service cost).
- Periodic pension cost in reported in P&L under IFRS.
- Periodic pension cost reported in OCI under U.S. GAAP.
- Periodic pension cost reported in OCI under IFRS.
So is it all referred to as Cost, and there is no “Expense”
And, as we all know, the Bostom [sic] CFA mock exam is never wrong . . . .
And, of course, Schweser also never gets anything wrong . . . .
I will have to look up what Wiley and AnalystPrep say, and take the average result. CFAI will be the tie breaker.