Suppose you have an under funded status last year of 1,699 and this year you have an over funded status of 621. How do we reflect the change in funded status on the BS?
you do not reflect the change in funded status. You reflect the funded status itself. Previous period you would have shown a Pension Liability of 1699 This period you would show a Pension Asset of 621 and since this is all on the Balance sheet - your equity accounts and various other things would have matched up to show the difference of 2320$. (621-(-1699))
That’s what I thought, but I was doing a question from the CFAI text (#11 on 125 of the FSA book) and they said that we would adjust equity for the difference.
The Q11 has a weird thing if I remember right. They show you what’s on the balance sheet in the table. Basically one of the two - Asset or Liab is correct. Do not have the book here to confirm. also do check if it is SFAS 158 (new US GAAP standard) that is being used.
The answer they give is: ’ The change in the funded position of $621 is recorded as a change in other comprehensive income within shareholder’s equity’ the question doesn’t say anything about SFAS 158…
look at the table on the left. And look towards the middle of the table. They show you what the asset was, the liability is and what the SH E position is. Based on that you know what is a correct #, and what should happen to move them to the right #.
I’m not sure we’re talking about the same question… the only table they’ve given is a reconciliation of the funded status…