Anyone notices the discrepancy in recording funded status in CFA curriculumn?

CFA Level II FRA
#1

Hi guys,

I’ve just gone through reading 20: Pension and other Post-employment benefits and noticed the discrepancy in recording funded status

In page 176, curriculumn writes that Funded status reported on B/S = PBO - FV(Plan asset), while in the EOC first items set (p.205) the funded status = FV(Plan assets) - PBO (you can look at the table and see the derivation of the funded status amount)

So now, when the vignette says funded status > 0, what will we interpret here? asset or liability?

Second, this discrepancy also leads to different in calculation of total pension cost:

  1. If funded status = PBO - FV(Plan assets), then TOTAL PENSION COST = End funded status - Begin funded status + employer contribution

You can see this calculation in question 9 in EOC reading 20. The answer is B.1020

1020 = End funded status (PBO - FV(Plan assets) = 41,720 - 38700 = 3020) - Begin funded status (42000 - 39000 = 3000) + Employer contribution (1000) = 1020

  1. If funded status = FV(Plan assets) - PBO, then TOTAL PENSION COST = End funded status - Begin funded status - employer contribution

This is also the case in question 6 (EOC Reading 20). The answer is A

Hmmmm…

Can anyone shed some lights on this?

Thanks so much!

#2

Read the footnotes. Stupid curriculum wants to confuse us even more (as if their reading doesn’t do a good enough job).

#3

So we must look for additional info. before concluding anything? Is that what you mean Cinderella? :smiley:

#4

This is probably the stupidiest part of the pensions reading.

why use two different formulas to refer to the same thing only to confuse candidates the more?

#5

Yeah, this part makes me feel extremely confused @@

Normally, I will double check the total pension cost by going directly

Specifically, in question 9, we can calculate the amount of total pension costs as

TOTAL PENSION COST = Service cost (both current and pas = 200 +120 = 320) + Interest expenses (7% x OB PBO = 7%*42000 = 2940) + Acturial loss (460) - Actual return (2720) = 1020

This can also be applied to question 6 to calculate pension cost.

#6

I just do it this wyay: funded status = net pension liability = PBO - FV of plan assets