2017.Fall #9, Change in paid-in surplus
Hi, I'm looking at the examiners report, and all sample solutions include the change in "Gross paid-in and contributed surplus" as the difference between 7,600 and 2,000 (given in the problem). I think this might be an error.
The Capital and Surplus Exhibit (of the balance sheet) lists 3 items which have similar wording but not exact:
Surplus Adjustments: paid-in, and transfer to/from Capital.
However, the "Gross paid-in and contributed surplus" is actually listed in line 34 of the Liabilities, Surplus and Other Funds exhibit (of the balance sheet).
Do you think CAS made a mistake here? Or am I missing something fundamental? Thanks for your help.
Comments
The change in Gross paid-in and contributed surplus from prior to current year is the sum of the three items of Surplus Adjustments for the current year. This is a portion of Direct charges to surplus. Net Income and Direct charges to surplus together constitute the change in Surplus from prior to current. The CAS solution is correct.
Thanks for clarifying.
Looking at the balance sheet & income statement in Odomirok, the change is 0, so it is difficult to tell that the "surplus adjustment paid in" amt is the change from line 34 of the Liabilities exhibit.
However, based on what you said, it does reconcile with the Liberty Mutual balance sheet & income statement linked in the wiki. Thanks!