# TPPC vs periodic pension cost

Hi all,

I think a lot of ppl are finding this very confusing, what is the diff between TPPC and periodic pension cost? they both go to the income statement and i do know TPPC use actual return on asset and periodic pension cost use expected return.

They have different formulas too:

TPPC = Contribution - (change in funded status)

TPPC = ending PBO - Beg PBO + benefits paid - actual return on assets

TPPC = current service cost + interest cost + past service cost +/- actuarial g/l - actual return

GAAP periodic pension cost: service cost + interest cost +/- amortization of past service cost - expected return on assets

IFRS periodic pension cost: service cost + past service cost + net interest expense

Also, in every single example in schweser, when asked to calculate GAAP periodic pension cost, they always ask you to ignore amortization so there is not a single example explaining how to do the math with amortization. I supposed they think its unlikely to appear in the exam.

Any help would really be appreciated, have seriously no idea what is going on here… Total periodic pension cost has 2 components under IFRS and USGAAP.

One part flows through the Income statement and is known as the interest expense and the other flows through the OCI.

There are differences between the components under each of the accounting methods.

It is pretty confusing if you ask me.

As for amortization, that is only used for GAAP and it always flows through the IS.

Echoing what Ben said, TPPC is the same for both GAAP and IFRS.
TPCC is made up of PPC (periodic pension cost) OCI + PPC in the Income Stmt. PPC OCI and PPC I/S will be different under GAAP and IFRS individually but summed back up (TPCC), it will equal each other:

GAAP: PPC OCI = 10M, PPC I/S = 5M, TPCC = 15M
IFRS: PPC OCI = 8M, PPC I/S = 7M, TPCC = 15M

and yes, TPPC does use actual returns, vs. PPC uses expected returns

Total periodic pension cost and periodic pension cost are the same thing.

I believe that when you wrote PPC what you meant was Pension Expense; i.e., that portion of (total) periodic pension cost shown on the income statement.