An increase in the present value of a defined benefit obligation resulting from employee service in the current period is referred to as:

Question

Quizplus · Accepted Answer

Current service cost represents the present value of the additional benefits earned by employees in the current period, and it increases the defined benefit obligation. Past service cost represents the present value of the additional benefits granted to employees for their past service, and it is recognized immediately or amortized to income over a period. Interest cost reflects the increase in the defined benefit obligation that arises as a result of the passage of time and the accumulation of interest on the obligation. Actuarial gains or losses occur due to changes in actuarial assumptions or experience adjustments, and they impact the defined benefit plan's funded status.

An Increase in the Present Value of a Defined Benefit