Costs related to a new pension plan that are necessary to "catch up" for services rendered prior to the inception of the pension plan are classified as

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Prior service costs are costs related to a new pension plan that are necessary to "catch up" for services rendered prior to the inception of the plan. This is in contrast to service costs, which are the costs of providing benefits for a given period, and actuarial losses, which result from changes in actuarial assumptions or other factors affecting the calculation of pension liabilities. Retroactive deferred charges are not applicable in this context.

Costs Related to a New Pension Plan That Are Necessary