[jm962011]

This is a research question in the UWorld Roger CPA Review material:

An entity wishes to communicate to users of its financial statements that it is not likely to pay dividends because it is accumulating funds for a future acquisition. It is considering using an appropriation of retained earnings. Identify the location in professional standards that indicates whether or not an entity may recognize an appropriation of retained earnings.

I think the answer is 505-10-45-3

But Roger says the answer is 715-70-35-1.

Using the literature, 505-10-45-3 says:

“45-3 Appropriation of retained earnings is permitted, provided that it is shown within the shareholders’ equity section of the balance sheet and is clearly identified as an appropriation of retained earnings.”

715-70-35-1 says:

“35-1 To the extent a plan’s defined contributions to an individual’s account are to be made for periods in which that individual renders services, the net pension or other postretirement benefit cost for a period shall be the contribution called for in that period. If a plan calls for contributions for periods after an individual retires or terminates, the estimated cost shall be accrued during the employee’s service period.”