#3 Flashcards
Comprehensive income
net income + other comprehensive income. Change in equity from NON-OWNER sources
Does comprehensive income have to be shown on the face of the income statement?
No. There are other options, such as the statement of comprehensive income, statement of income and comprehensive income, or as a component of statement of changes of owner’s equity.
Does the related tax effect for component have to be disclosed for comprehensive income?
Yes. Either on the face of the statement or in notes of the statement. It just has to be disclosed.
Reclassification adjustments must be shown in the financial statement that discloses comprehensive income to:
a. to avoid including transactions with shareholders in items of comprehensive income
b. to show the tax effect of items of comprehensive income
c . to avoid double counting in comprehensive income items, which are currently displayed in net income.
d. to show what portion of comprehensive income is from the realization of current assets.
C. to avoid double counting in comprehensive income item. If it’s reclassification, that means it’s been counted somewhere else, so we need to show how we are not double counting, just reclassifying the amount to somewhere else.
What’s the relationship between comprehensive income and tax
All comprehensive income must be shown net of related tax effect
Where is extraordinary income reported in?
Net income
Where is accumulated other comprehensive income reported in?
the stockholder’s equity section of the balance sheet
Difference between unrealized gains/losses for available-for-sale security and other securities such as trading security?
When it’s available-for-sale, the unrealized gains/losses are reported in other comprehensive income until the securities are sold. Other securities are reported in net income.
What’s the difference between reporting revaluation plus and revaluation loss under IFRS?
Under IFRS, revaluation gain is reported in other comprehensive income while revaluation loss is reported in net income, unless there is revaluation gain to be wiped away.
Other comprehensive income consists of what components?
5 components: PUFER
Pension adjustment
Unrealized gain/loss (only for available-for-sale security)
Foreign currency items
Effective portion of cash flow hedge
Revaluation surplus (only surplus. revaluation loss is reported in net income)
Criteria for determining which investments are treated as cash equivalent should be disclosed in
summary of significant accounting accounting policy
Purpose of information presented in notes to the financial statements?
provide disclosure required by GAAP
What kind of related party transaction requires disclosure under GAAP?
Under GAAP,transactions that are outside of the ordinary course of business, like giving loans to officers.
For a related party transaction, does the amount due to the affiliate or the dollar amount of the purchases during the year must be disclosed?
Yes. BOTH must be disclosed
What kind of related party transaction requires disclosure under IFRS?
Under IFRS, Loans to officers and key management compensation require disclosure.
