GAAP Treatment of Discounting Loss Reserves

Going through past exam questions, I am confused as to how GAAP handles the discounting of reserves.

2019 Spring #17 lists "GAAP: discounts reserve" as an answer worth full credit of .5 points

2014 Fall #19 lists "With the exception of fixed and reasonably determinable payments such as those emanating from workers’ compensation tabular indemnity reserves and long-term disability claims, property and casualty loss reserves shall not be discounted" as an answer worth full credit of .5 points. Additionally, under common mistakes, it says: "Loss reserve discounting: stating that GAAP simply allows discounting with no limitations."

These seem directly contradictory. One states it is allowed, one states that it is not allowed with an exception. Which is correct?

Comments

Sign In or Register to comment.