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As 15 conceptual doubt

Siddharth (Thinker) (267 Points)

27 February 2016

Hi, I was going through AS15: Employee Benefits and I saw that Past service cost, which is the increase in Obligation, is Deducted from the 'Present Value of Obligation '. Why is that? Same is the case with any unrecognised cost. Please help.

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SHINY (CA Final Student) (699 Points)
Replied 28 February 2016

Because Revised figures of Employee Benefits doesn't always lead to Increase in Obligation. It results in Decrease in Obligation as well. Therefore it's been deducted from PVDBO.

Siddharth (Thinker) (267 Points)
Replied 28 February 2016

But then if in this year the pension is revised from 2% to 2.5% then that leads to a Past Service Cost as well as an increase in Obligation and in this case also the PSC is deducted from the Obligation.?.