Under both U.S. GAAP and IFRS, the following formula calculates the Net Pension Expense (or Credit) for a defined benefit pension plan:

Interest Cost (the increase in the obligation because of the passage of time)
+ Service Cost (the increase in the obligation because of an additional year of employee service)
- Expected Return on Pension Investments
+/- Amortization of Performance and Actuarial Gains and Losses
+/- Amortization of Prior Service Cost

Question

Under both U.S. GAAP and IFRS, the following formula calculates the Net Pension Expense (or Credit) for a defined benefit pension plan:

Interest Cost (the increase in the obligation because of the passage of time) 
 +    Service Cost (the increase in the obligation because of an additional year of employee service) 
 -     Expected Return on Pension Investments 
 +/-  Amortization of Performance and Actuarial Gains and Losses 
 +/-  Amortization of Prior Service Cost

Quizplus · Accepted Answer

This formula is commonly used to calculate the Net Pension Expense (or Credit) under both U.S.GAAP and IFRS. It includes interest cost, service cost, expected return on pension investments, and amortization of performance and actuarial gains and losses, as well as prior service cost.

Under Both U