Pensions - EOC Q22 increase, balance, correct, someone, please

luckygiftvn

CFAI Vol 2 Page 247 Q22

could someone please explain why adjusting the balance sheet would result in a 667 increase in equity (correct answer C as per text) and not an increase in assets as well (answer choice A)? i.e wouldnt both A and C be correct answers?

Thanks



Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 09:00PM by oz001.

wxs1986

because the actuarial gains and unrecognized prior service cost are UNRECOGNIZED, and therefore sitting in other accumulated comprehensive income -- an adjustment to shareholders equity only would be prudent.

bonus points: name the movie and the company where the lead character attempts to acquire a company for its overfunded pension assets with the intent to shut the company down and raid pension asset for a net profit.



Edited 2 time(s). Last edit at Sunday, May 29, 2011 at 09:23PM by prophets.

benbenxiong

thanks prophets.

but as i understand under IFRS (the question states that the company follows IFRS) unrecognized / unamortized expenses are not included in OCI but disclosed in footnotes.

in any case, if those did sit in accumulated OCI they would be part of equity anyways. in that case wouldn't that simply be a reclassification within the equity section and no increase in equity per se?

bonus points answer - wall street / blue star

wizofoz

prophets Wrote:
-------------------------------------------------------
>
> bonus points: name the movie and the company
> where the lead character attempts to acquire a
> company for its overfunded pension assets with the
> intent to shut the company down and raid pension
> asset for a net profit.


I don't know blue horseshoe, what say you?