标题: Clean surplus relationship - Residual Income [打印本页] 作者: torontoanalyst 时间: 2011-7-13 13:55 标题: Clean surplus relationship - Residual Income
For the residual income model:
The clean surplus relationship may not hold when items are charged directly to shareholders' equity.
Therefore, we have to adjust net income for these items if they are not expected to reverse in the future.
--> Effect of violation is that Net income is not correct but book value is correct.
Items that can bypass the income statement include:
- Foreign currency translation gains and losses that flow directly to retained earnings under the all current method.
- The minimum liability adjustment in pension accounting
- Changes in the market value of debt and equity securities classified as available for sale
All above is understood except for '- The minimum liability adjustment in pension accounting'
. What exactly do they refer to when talking about minimum liability adjustment in pension accounting?
P.289 from Equity schweser book作者: redskins44 时间: 2011-7-13 13:55
PUFE pneumonic.
Pensions
Unrealized gains or loses on AFS
Foreign Exchange translations (All Current method)
Effective portion of a cash flow hedge作者: sameeragarwal 时间: 2011-7-13 13:55
So basically, instead of writing:
- The minimum liability adjustment in pension accounting
They could have said --> Change in funded status reported in OCI.
