pension account adjustment

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ndzhai

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found in footnote 1000 fair value of asset, 1600 PBO, tax rate 40%
what is the adjustment effect on equity?
it says 600*0.6, but where the hell the other 600*0.4 gone?
 
i guess rest goes to liability as we have here negative funded status and you will decrease your asset by same amount.
cpk will tell it correctly
 
I’m a little confused here, can you elaborate on the question?
It seems to be a pension expense vs economic pension expense thing, which changes taxes?
 
This looks like so last year’s question. I think there were DTL and DTA adjustments due to pension adjustments last year.
Pension expense -> DTL move… not in this year’s curriculum.
 
There are at least a couple of questions like that in Schweser this year… like yesterday jdane had posted a question about effect of LIFO Inventory on the balance sheet - we adjusted it the way we were told to - Add LIFO Reserve to the Inventory (Asset) and add LIFO Reserve to the Equity.
The way Schweser had done it: add LIFO Reserve to asset, add LIFO * (1-T) to Equity and LIFO Reserve * T to the DTL.
But in the long run if the DTL is not expected to reverse - this would be treated as Equity too. So that adjustment would be DTL reduce, Equity Increase.
But Schweser is still going the old way…
 
I think the qbank really screws me a lot. there are questions just so tough or wired that I can never get my heads around. I believe they just keep lots of questions for about 10 years or even older in there
when doing CFAI example, it goes so smooth and I nearly wanted to through my books away for the rest of days
but when touch qbank, I was absolutely blown away
thanks for explanation CP
 
ndzhai Wrote:
——————————————————-
> I think the qbank really screws me a lot. there
> are questions just so tough or wired that I can
> never get my heads around. I believe they just
> keep lots of questions for about 10 years or even
> older in there
>
> when doing CFAI example, it goes so smooth and I
> nearly wanted to through my books away for the
> rest of days
> but when touch qbank, I was absolutely blown away
>
> thanks for explanation CP
I agree - the Qbank questions are definately not as clear and you can tell they didn’t put as much effort into every question. Sometimes the information is vague (like multinational companies - what the F is the functinal currency - sometimes they don’t tell you everything and you have to guess). With that said, I feel like if you can answer the Qbank questions, you can answer almost anything. This was true for level 1 too - I found level 1 test to be much easier than the Qbank questions.
 
cpk123 Wrote:
——————————————————-
> There are at least a couple of questions like that
> in Schweser this year… like yesterday jdane had
> posted a question about effect of LIFO Inventory
> on the balance sheet - we adjusted it the way we
> were told to - Add LIFO Reserve to the Inventory
> (Asset) and add LIFO Reserve to the Equity.
>
> The way Schweser had done it: add LIFO Reserve to
> asset, add LIFO * (1-T) to Equity and LIFO Reserve
> * T to the DTL.
>
> But in the long run if the DTL is not expected to
> reverse - this would be treated as Equity too. So
> that adjustment would be DTL reduce, Equity
> Increase.
>
> But Schweser is still going the old way…
CPK, if on the exam they don’t say anything about reversal and what not…the correct treatment would just be increase inventory and increase equity correct?
Also, in the FSA synthesis SS7 (B/S adjustments) none of the adjustments require adjusting DTL and DTA’s correct?
 
text this year does not talk of doing things that way… (like in Schweser). so I assume directly without adjusting DTL/DTA is the right way.
 
cpk123 Wrote:
——————————————————-
> text this year does not talk of doing things that
> way… (like in Schweser). so I assume directly
> without adjusting DTL/DTA is the right way.
thanks, cpk can I get an email address?
 
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