Explanation:
Under IFRS and US GAAP accounting standards for defined benefit pension plans:
Service costs are included in net income (profit or loss). These represent the increase in the pension obligation resulting from employees' service during the current period.
Remeasurements (which include actuarial gains/losses and the return on plan assets excluding amounts included in net interest) are not included in net income. Instead, they are recognized in other comprehensive income (OCI).
Key components of defined benefit pension expense:
Therefore, only employees' service costs are included in net income, while remeasurements are excluded from net income and reported in OCI.
Ultimate access to all questions.
Which of the following components of a defined benefit pension plan is included in net income?
A
Remeasurements only.
B
Employees' service costs only.
C
Both remeasurements and employees' service costs.
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