RI Question

Hope someone may be able to help me… what is the correct B/S adjustment to make when calculating RI, ROE and BV, when there has been a foreign ccy translation gains as part of comprehensive income (and do not expect them to reverse) - I could not find this in Schweser. Thanks

Good question. This will violate the clean surplus thing and not wash in the long-run.

I don’t think it is addressed in the CFAI texts. It’s only mentioned as a violation of the clean surplus.

Generally if an item isn’t expected to reverse I believe it hits equity

Questions always tell you whether clean surplus hold or not. There are more than 100 adjustments to be done to use RI and EVA.