01.03 Statement of Comprehensive Income Flashcards
What is the purpose of reporting comprehensive income?
The purpose of reporting comprehensive income is to report a measure of overall enterprise performance.
To report the net change in equity (other than from transactions with shareholders) in a single amount and to provide a more complete picture of the total earnings of the firm for a period.
What is included in comprehensive income?
Comprehensive income includes all changes in equity during a period except those resulting from investments by owners/shareholders and distributions to owners/shareholders.
What are the two components of comprehensive income?
Comprehensive income = Net income + Other comprehensive income
True or false: other comprehensive income items are recognized in net income.
False. OCI items are not recognized in net income. They are recorded directly as increases/decreases in shareholders’ equity.
What items are included in other comprehensive income?
DENT
Derivative cash flow hedges
Excess adjustment on defined benefit pension plans
Net unrealized holding gains/losses on available-for-sale debt securities
Translation adjustments from foreign currency
What is accumulated other comprehensive income?
AOCI is a running total of OCI items through the balance sheet date. AOCI includes cumulative OCI for all periods. Just as net income is closed to retained earnings, OCI is closed to AOCI at the end of each reporting period.
What are the two ways GAAP requires presentation of comprehensive income?
Combined statement of comprehensive income
Separate statement of comprehensive income
What is the combined statement of comprehensive income?
It presents the components of net income and leads to net income as a subtotal. OCI items lad to total comprehensive income.
What is the separate statement of comprehensive income?
A separate income statement is presented immediately before the statement of comprehensive income. The net income amount resulting from the first statement is used as the beginning amount for the second statement, which then reports OCI leading to comprehensive income.
