A.3. The statement of comprehensive income Flashcards
What is the definition of comprehensive income?
Comprehensive is the change in equity (net assets) of a company that occurs during a period from transactions and other events other than those resulting from investments by owners such as sale of newly issued stock and distributions to owners suche as distribution of dividends or repurchase of shares.
Which items are considered other comprehensive income? (13)
1) Foreign currency translation adjustments that result from converting the financial statements of a foreign subsidiary from its functional currency into U.S. dollars for consolidated reporting.
2) Gains and losses on foreign currency transactions that are designated as, and are effective as, economic hedges of a net investment in a foreign entity, commencing as of the designation date.
3) Gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature, meaning settlement is not planned or anticipated in the foreseeable future, when the parties to the transaction are consolidated, combined, or accounted for by the equity method in the reporting company’s financial statements.
4) Gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges.
5) For derivatives that are designated in qualifying hedging relationships, the difference between changes in fair value of the excluded components and the initial value of the excluded
components recognized in earnings under a systematic and rational method.
6) Unrealized holding gains and losses on available-for-sale debt securities.
7) Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from the held-to-maturity category.
8) Gains or losses associated with pension or other postretirement benefits that are not recognized immediately as a component of net periodic benefit cost.
9) Prior service costs or credits associated with pension or other postretirement benefits.
10) Transition assets or obligations associated with pension or other postretirement benefits that are not recognized immediately as a component of net periodic benefit cost.
11) Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected.
12) The effect of changes in the discount rates used to measure traditional and limited-payment long-duration insurance contracts
13) The effect of changes in the fair value of a market risk benefit attributable to a change in the instrument-specific credit risk
