Important Points for IC 83 - Group Insurance and Retirement Benefit Schemes Exam
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Fair value of plan assets is the amount at which an asset could be exchanged or a liability settled between knowledgeable parties.
Past Service Cost comes into picture when an entity introduces a defined benefit plan or makes some changes to an existing plan, which results in increase of PVO for employees service in past periods which has to be accounted in current period.
Current Service Cost is the cost which arises because PVO increase due to the service rendered by the employees in the current period. It includes employees benefits which are not vested.
Interest cost arises because the benefits are one period closer to settlement. This is arrived at by multiplying the discount rate as determined at the start of the period by PVO at the beginning of the period.
Expected Return on Plan Assets is the net return. It comprises of interest, divident and other revenue derived from the plan assets and any realised or unrealised gain on the plan assets.
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