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Hello?I’m quite struggled about the past service cost.when should we calculate an interest cost on the past service cost and when should not.
I always think if the past service cost occur in the first day of this financial year, then we need to calculate theinterest cost.
but in the exam of June 2014, the past service cost did occur in the first day of that financial year, but no interest coston the past service cost.
than I’m confused why? what’s the difference?Did you use the answer on acca’s website itself? Then it does not reflect the new treatment. Go see that question in BPP or Kaplan revision kit.
oh?(?o?)?yes?in bpp practice kit the interest includes interest on past service costs. thank you very much!
So if the past service cost occur in the first day then we should calculate the past service cost Is that right?Hi,
Please ensure that you use the most up to date information with regards to the past exam questions as otherwise you will make mistakes in the final exam.
Yes, if the past service cost is on the first day of the accounting period then the associated interest will need to be calculated upon it.
Thanks
Hi sir,
but in the exam of June 2014, the past service cost did occur in the first day of that financial year, but no interest cost on the past service cost.
Do we have to calculate the interest cost which was not incurred in the first day of that FY?
Many thanks
Hi,
Good spot. I’ve just gone back and had a look at the detail in IAS 19 and the interest is only calculated on the liability, taking into account any changes as a result of contributions. Given the past service cost is not a contribution and merely an adjustment to the scheme for the enhanced benefits of the employee then it appears that no interest is charged against the past service cost. I learn something new everyday!
Thanks
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