Urgent: Need help on Pension Expense/Cost

CFA Level II FRA
#1

Hey Guys,

I have spent hours on getting deep into this calculating Total Periodic Cost and Pension Expense under IFRS and GAAP, but still could not get the crux of the matter. Schweser is crap and has confused me a lot and Curriculam does not provide enough examples (for the type of questions they have asked in EOC problems). Can someone plese help me in getting down to this concept specifically:

Difference between Periodic Pension Cost, Net Periodic Pension Cost, and Total Periodic Pension Cost under both IFRS and GAAP?

If anyone of you have some notes and can share with me that would be a big help (dkpmba@gmail.com).

Thanks.

#2

Periodic Pension Cost, Net Periodic Pension Cost and Total Periodic Pension cost — all three are the same!

_ The total periodic pension cost is the change in the net pension liability adjusted for the employer’s contribution into the plan _. ———Page 210 volume 2

T** he periodic cost of a company’s DB pension plan is the change in the net pension liability or asset adjusted for the employer’s contributions.———** Page 177 volume 2

_ The relation between the net periodic pension cost and the plan’s funded status can be expressed as Net periodic pension cost = Ending funded status – Employer contributions – Beginning funded status _

—–Page 210 volume 2

#3

Also, i will advise that you should consider investing some money on the Elan Videos. i found it very useful at handling this subject.

#4

Periodic Pension Cost = Net Periodic Pension Cost = Total Periodic Pension Cost = Employer’s contribution - change in funded status of the plan

#5

What about the components which come in the income statement and the OCI? Under gaap and ifrs? s2000 we need your help

#6

Thanks guys. There are a number of concepts that are missing from Schweser such as Remeasurement. i do not see any where in schweser.

#7

Total Periodic Pension Cost is the same under GAAP and IFRS but its components are differently located either in IS or in OCI.

There is nice table in the reading on pesions in CFAI curriculum so I won’t write it here as there so a lot of stuff.

#8

TPPC (total periodic pension cost) = P&L Pension Cost + OCI Pension Cost (according to the text).

Under IFRS , the P&L pension components are current service cost and net interest income/expense (discount rate * beginning funded status). The OCI Pension cost portions are the remeasurements (AGL and the Actual - Expected return on plan assets - use discount rate * funded status).

Under GAAP , the P&L pension components are Service Cost, Interest Cost, Amort of PSC, Expected return on plan assets. The Amortization of deferred G/L are decided using the corridor approach. If these are 10% of greater of PBO or plan assets, these get amortized in OCI

I think this is right (using my notes).