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Hello mike, i sat for P2 exams in June 14 and waiting for the results to be out in about 14 hours.
I realised that ACCA made changes to the suggested solutions for P2 June 2014 exams.
In Q1, working 4 (question on Consolidate SOCI), there’s this paragraph:
” IAS 19 states that past service cost should be recognised immediately and
the past service cost will be included in the defined benefit obligation at 1 May 2013. Therefore there is no need to calculate an interest cost on the past service cost. ”I’m not sure what does this really means, but as far as i am concerned, when there’s a past service cost at the beginning of the reporting period, then the interest cost should include the amount of the past service cost. The past service cost is incurred on 1 May 2013, which is beginning of the period and the end date is 30 Apr 2014.
According to many past years which have past service cost questions, they also calculated the interest cost based on define benefit liability at beginning of the period + the past service costs.
However, in this exam diet, they treated it differently based on the assumption used by the examiners.
I’m getting worried here, what will be the maximum marks I lost for including the past service cost in the calculation of the interest costs?The employee benefit adjustments carries 4 marks in total.
Ask yourself this … “Is this a pass / fail point? The fact that I make one mistake in a section worth 4 marks – is this the straw that breaks the camel’s back?”
You’re right of course – this one mark lost on the interest cost of a past service obligation increase COULD make the difference between 50% :-))) and 49% :-(((
But in that situation it means that you’ve lost 50 marks somewhere else so why pick on the interest / past service point? Why not identify all the other 50 places where you might have lost marks?
This one small point that you are worrying about is just that – it’s one small point. So don’t worry! And it’s certainly the case that you’re not facing losing all four marks. One maximum loss
And good luck with your results in just over 12.5 hours
Alright thx Mike. Just want to inform you that I passed P2 with 68 marks. Thx to u for your helo. ?? cheers
Very well done Nizarsalleh, I’m really pleased for you. Onwards and upwards 🙂
Hi sir, just wana confirm this, so does it mean interest cost should be calculated for the past service cost in this question?
If the past service cost was introduced by a variation that occurred on day 1 of the year, yes, interest cost is applied also to the past eservice costs
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