CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Under the U.S. GAAP, prior service costs due to a pension plan amendment are expensed in the year the amendment occurred. True or False?
Correct Answer: False

The cost of any retroactive benefits (prior service cost) is deferred and amortized over future periods using the years-of-service method.

User Contributed Comments 3

User Comment
dream007 Analyst notes, common. This is only true for US GAPP. Prior service cost is expenses in the year it is recognized under IFRS.
birdperson is what dream007 said true or false?
daverco From the curriculum text: Under IFRS, service costs (including both current service costs and past service costs) are recognised as an expense in P&L

Under US GAAP, reported under OCI and amortized to P&L over the life of affected employees.
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