[jamesjohnson11]

I have a question about FAR. On page F6-14, Tim notes that the second journal entry at the top is crediting OCI which is taking it out of AOCI. Then on the next page, the first journal entry on the page, Tim notes that a credit to OCI is putting it into AOCI. I am just confused because how is it that you can have two credits to the same account (OCI) and yet one time it is being taken out and the other time it is being put in. How is it that a credit to the exact same account can do two totally different things.

R PASS
A PASS
B PASS
F AUGUST

[kaaCPA]

i was wondering this exact same thing. maybe he mis-spoke?

AUD | 85
REG | 77
FAR | 76
BEC | 83
========
ETH | 93
State Board Application pending!

[Anonymous]

I took FAR in June so this is not at all fresh on my mind but I remember asking the same question when I reviewed this. I'll try to explain the conclusion I finally came to (not 100% sure if it is correct, but it made sense to me). First of all, these two entries are talking about two differnet things, the one on page 14 is taking about the amortization of expense and the one on 15 is taking about the pension gains. So you have to look at them differently. If you look at page 13 you will see a dr to OCI for the prior service cost and then page 14 shows a cr to OCI to amortize the cost (pulling it out of OCI). But for gains its opposite. The first entry on page 15 shows a cr. to OCI which puts the gain into OCI and then the next entry amortizes it out of OCI with a dr.

Like I said, I'm not 100% sure that I'm correct, but this is how I interpreted it after being confused for awhile. Hope this helps. Good luck with FAR!!

[Anonymous]

Oh and I left one point off – Prior service costs decrease the funded status of the plan and gains increase the funded status of the plan.

[Author]

Replies