Hey everyone,
Common sense and many sources online say that funded status is calculated as fair value of plan assets - pv of obligations.
However, the CFAI says funded status is calculated as obligation - fair value of plan assets…
any idea which one to use for exam? I’m pretty sure the curriculum is wrong on this one.
it does not really matter as long as you know that if PBO > assets, then you have a liability.
U.S GAAP and IFRS have different formula for the funded status you will report on the balance sheet.
The present value of the obligation IS the obligation, just semantics
i know that pv of obligation is obligation… im talking about how they’re switched in the equation.