2.3 Comprehensive Income

Question 1

Define comprehensive income

Answer 1

includes all changes in equity of a business during a period except those from investments by and distributions to owners

Question 2

Identify the components included in comprehensive income

Answer 2

• net income

- other comprehensive income (OCI)

Question 3

Identify the items included in OCI

HINT: 5

Answer 3

• Unrealized holding gains and losses on available-for-sale debt securities (except those that are hedged items in a fair value hedge)
• Gains and losses on derivatives designated and qualifying as cash flow hedges
• Certain amounts associated with recognition of the funded status of post-retirement defined benefit plans
• Certain foreign currency items
• Changes in fair value attributable to instrument-specific credit risk of financial liabilities for which the fair value option is elected

Question 4

How are the components of OCI presented on the income statement in relation to taxes?

Answer 4

• each component must be presented net of tax, or

- one amount must be presented for the aggregate tax effect on the total of OCI

Question 5

Reporting:

How must an entity present comprehensive income recognized for the period?

Answer 5

• In one continuous financial statement or

- In two separate but consecutive statements

Question 6

Reporting:

What must the 2 sections contain when presenting comprehensive income as one continuous statement?

Answer 6

• A total of net income with its components,
• A total of OCI with its components, and
• A total of comprehensive income

Question 7

Reporting:

Identify the requirements when presenting comprehensive income in separate but consecutive statements:

Answer 7

• The first statement (the income statement) presents the components of net income and total net income
• The second statement (the statement of OCI) is presented immediately after the first.
• entity must begin 2nd statement with net income

Question 8

Reporting:

Identify the items presented in the 2nd statement (the statement of OCI) when presenting separate but consecutive statements for comprehensive income reporting.

Answer 8

• the components of OCI
• the total of OCI, and
• a total for comprehensive income

Question 9

IFRS Difference:

How must an entity group items of OCI according to IFRS?

Answer 9

• those that will not be reclassified to profit or loss (e.g., actuarial gains and losses on defined benefit pension plans)
• those that may be (e.g., exchange differences arising from foreign operations)

Question 10

Identify the account to which total OCI is closed to at the end of each reporting period?

Answer 10

accumulated OCI

Question 11

What is the accumulated OCI account?

Answer 11

a permanent account that is reported in the equity section of the balance sheet.

Question 12

How does OCI effect accumulated OCI?

Answer 12

OCI increases accumulated OCI

Question 13

How does OCL (other comprehensive loss) effect accumulated OCI?

Answer 13

OCL decreases accumulated OCI