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how past service costs?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › how past service costs?

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by Stephen Widberg.
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  • July 13, 2021 at 2:06 pm #627623
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    “At 31 March 20X3, TC granted additional benefits to those currently receiving benefits that are due to vest over the next four years and which have a present value of $4 million at that date. They were not allowed for in the original actuarial assumptions.”

    sir my text states that the above $4m expense for the company are past service costs, but i don’t understand how? to be considered as past service costs they at least need to relate to “employee service in past period”. the fact that they will be vested in future means conditions will will be fulfilled in future(like future employee service) which means its false to classify them as past service cost!

    can you shed some light on this sir?

    July 14, 2021 at 7:08 am #627663
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    I would mark past service costs as correct. All that matters to get the mark is that you say ‘in P&L’ . You are not training to be a lawyer.

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