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Study Session 5: Financial Reporting and Analysis: Intercorporate Investments, Post-Employment and Share Based Compensation, and Multinational Operations

Pension expenses vs Pension costs

Hello Forum,

I still have problems understanding the concept. Could someone please tell me if I am right or wrong? Help is much appreciated

For pension costs there are 2 possible ways to calculate them. One where we add/subtract each item and another where we look at the ending value minus the beginning value. 

current service costs
interest costs (+)
past service costs (+)
actuarial losses (+)
actuarial gains (-)
return on plan assets (-)

Contribution to Net Income

. The contribution of FCB’s equity portfolio to its net income for 2012 is closest to:
A. $25,000. B. $33,000. C. $41,000 The answer is B

Security                                Mercury.     Venus              Jupiter          Saturn

Classification                        HFT         Desig @ FV.      AFS              Equity Meth

Divs received during year.     2000            5000            3000             4000

Share of NI for the year.        8000            4000             9000             20000

Goodwill Impairment Loss

Anyone done this question on the topic test? I don’t understand how they calculated the goodwill impairment loss.

The question uses US GAAP

Part A: Values at Acquisition, 1 January 2014 ($ thousands)

Book Value
Fair Value

Current assets

Plant and equipment (P&E)*



pension cost


can someone explain the question 23 from the morning mock exam pls?

Under US GAAP we have to calculate the amount of periodic pension cost reported in the P&L.

The answer is: Current service cost 1,151 + Interest cost on the obligation 5,441 - Expected return on plan assets 4,597 + Amortization of past service cost 272 = 2,267


beginning PBO + current service cost + interest expense + past service cost +/- actuarial loss/gain - benefit paid + employee contribution = ending PBO

beginning FV of plan assets + actual return - benefit paid employer contribution + employer contribution + employee contribution = ending FV of plan assets



Unrealized Gains & Losses for Equity Method!!

There is a statement that I do not get in the question sets of the institute, US GAAP allows the option of recording an equity method investment at fair value with the gains and losses going to profit and loss.

Unrealized gain from the change in fair value:

($37.60 – $35.00) × 4 million shares = $10.4

Dividend income:

$1.20/share × 4 million shares = 4.8

Total investment income = $15.2

Identifiable Intangibles

In the equity method, when calculating the NI generated from the associate, do we need to deduct amortization from identifiable intangible or just in case they are not recorded?

And what does recorded and unrecorded intangibles mean, and are not they deducted from I/S like depreciation, and if they are not recorded in I/S why is that?

Consolidating VIE

  • Masson is selling the distribution center for $200 million. The net book value of the center would have been $170 million at year-end therefore the company will record a $30 million gain. I reflected the gain in my projections as an increase in net income in 2014. There will be no taxes on this gain due to the availability of loss carry forwards.

multinationals - current vs temporal method

When we are converting ROA using the current rate and temporal methods, which currency do we use to convert “average assets” when we are using the temporal method?

For the current rate method it would be the current rate but for temporal there is a discrepancy between monetary and nonmonetary conversion rates.

Just wondering which one to use if they are asking about ROA generally as a potential qualitative question rather then provided line items of each type of asset.