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Basic Question 17 of 24

Under the U.S. GAAP, prior service costs due to a pension plan amendment are expensed in the year the amendment occurred. True or False?
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User Contributed Comments 3

User Comment
dream007 Analyst notes, common. This is only true for US GAPP. Prior service cost is expenses in the year it is recognized under IFRS.
birdperson is what dream007 said true or false?
daverco From the curriculum text: Under IFRS, service costs (including both current service costs and past service costs) are recognised as an expense in P&L

Under US GAAP, reported under OCI and amortized to P&L over the life of affected employees.
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I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

explain and calculate measures of a defined benefit pension obligation (i.e., present value of the defined benefit obligation and projected benefit obligation) and net pension liability (or asset);

describe the components of a company's defined benefit pension costs;

explain and calculate the effect of a defined benefit plan's assumptions on the defined benefit obligation and periodic pension cost;

CFA® 2025 Level II Curriculum, Volume 2, Module 11.