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The example of opentuition note doesn’t include the past service cost when calculating the interests on defined benefit liabilities.
In BPP learning materials, some of the question include this costs while others not. I am really confuse about this matter.
Hi,
It depends on when the past service cost came into effect. If it is the start of the year then interest will need to be charged as interest is charged on the balance at the start of the year. If it is at the end of the year then no interest needs to be charged.
Thanks
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