Fall 2018 Q16
I'm having a lot of difficulty with this problem.
To calculate surplus, I need to find net income. In other problems, such as 2018 Spring #10, net realized capital gains are included in net income.
In the solution to this problem, however, net realized capital gains are not included in any calculations, so I'm confused.
I also need to calculate direct charges to surplus. I thought that change in stockholder dividends was included, and it is in 2019 Fall #12.
But in this solution, it is not the change in stockholder dividends that's included, but rather just the current year value, so I'm confused again.
Finally, I'm wondering if there's an error in the examiners report solution: 106-72-83+41+51-46+105=102, not -108. It seems that they subtracted rather than added 105.
I'd really appreciate some help on all this.
Comments
1) Net Income includes Inv Gain, which is Inv Income and NRCG. Also, the two Inv Gain items in the IEE, given, make up Inv Gain. You should use those two, because you are not given Inv Income.
2) No, it is the sh div paid in the year that is the charge. It is handled this way in 2019F12 as well.
3) That's a typo. It was meant to read -105.
Thank you!
Sure, good luck.
I am having trouble understanding the solution. I was inclined to calculate Net Income and try solving for CY PHS that way like Fall 2017 Q10, but my solution isn't matching. Do we have to calculate this differently due to "other expenses"? If calculating like Fall 2017 Q10 should work, can you show the workings please.
Thank you for your help.
The solutions of these two problems follow the same method. You calculate net income, changes in assets and liabilities that impact surplus, sum them all and get the change in PHS.