With the total liability recognizing the employees total service, how is the liability divided for cost purposes?
The total liability is divided into three pieces: the part that is attributed to past years (the “Past Service Liability” or “Actuarial Accrued Liability”), the part that is being earned this year (the “Normal Cost”), and the part that will be earned in future years (the “Future Service Liability”). The Actuarial Accrued Liability is the amount disclosed on the financial statements.
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