Past service cost
IAS 19 generally recognises past service cost in profit or loss at the earlier of the plan amendment or curtailment and recognition of related restructuring costs or termination benefits. It can be positive or negative, depending on whether benefits increase or decrease. It is distinct from current service cost and actuarial remeasurements, which have different presentation.
Worked example
An employer amends a pension plan so that employees receive additional benefits for prior service. The amendment increases the defined benefit obligation by $40,000. Assuming the recognition date has been reached, $40,000 past service cost is recognised in profit or loss.
Common mistake
Spreading past service cost over future vesting years automatically or presenting it as an actuarial remeasurement in other comprehensive income.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | SBR | Direct | September 2026–June 2027 |