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US GAAP | IFRS |
The measurement of plan obligations generally does not reflect a reduction when the employer's exposure is limited or when the employer can increase contributions from employees from current levels to help meet a deficit.
Under US GAAP, employee contributions typically reduce service cost in the period of contribution.
| The measurement of plan obligations where risks associated with the benefit are shared between employers and employees should reflect the substance of the arrangements where the employer’s exposure is limited or where the employer can increase contributions from employees to help meet a deficit.
IFRS allows contributions that are linked to service, and do not vary with the length of employee service, to be deducted from the cost of benefits earned in the period that the service is provided rather than spreading them over the employees’ working lives.
Contributions that are linked to service, and vary according to the length of employee service, must be spread over the service period using the same attribution method that is applied to the benefits; either in accordance with the formula in the pension plan, or, where the plan provides a materially higher level of benefit for service in later years, on a straight line basis
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Select a section below and enter your search term, or to search all click IFRS and US GAAP: similarities and differences