BALANCE SHEET, INCOME STATEMENT & COMPREHENSIVE INCOME

Question 1

Income From Continuing Operations

Answer 1

1. Multi step Income (operating Revenues & Expenses
   Non operating Revenues & Expenses and other G&L)

2.Single step Income
(total exp - total revenue)

Question 2

Foreign Exchange Transactions

Answer 2

Direct Method - Domestic price of one unit of another currency (1 Euro = $ 1.47)

Indirect Method - Foreign price of one unit of domestic currency (0.68 euro =$1.00)

Question 3

Comprehensive Income

Answer 3

is the change in equity

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

Question 4

Pension Adjustment

Answer 4

• Certain G&L from defined benefit pension plan accounting must be recognised in OCI in the year the changes occurs.
• G&L are included in OCI until rec.g as pension exp on income statement

Question 5

Unrealised G&L (Available for sale debt securities and hedges)

Answer 5

reported in OCI until securities are sold or until the CF associated with the hedged item are realized
1. unrealised holding G&L on available for sale debt securities
2. unrealised holding G&L that result from a debt security being tf into the available for sale category from HTM
3. subsequent Decreases / Increases in FV of available for sale debt securities prev written down as impaired
4.G/L on derivative instruments that are designated as cash flow hedges
5. For derivatives that are designated in qualifying hedging relationship

Question 6

Foreign Currency Items

Answer 6

• Foreign Currency translation adjustments and G&L on foreign currency transactions that are designated as economic hedges of a net investment in foreign entity

-Foreign Currency translation adjustments remain in OCI until the sale/liquidation of the inv. in foreign entity

• G&L on intra-entity foreign currency transactions that are of a longterm investment nature, when the entities to the transaction are consolidated, are combined or accounted for by the equity method

Question 7

Instrument Specific Credit Risk

Answer 7

For liabilities for which the FV option is elected, changes in FV that are attributable to instrument specific credit risk

Question 8

Financial Statement Reporting

Answer 8

Single Statement Approach - displays OCI items individually and in total below Net Income Amt and totals them for CI

Two Statement Approach - displays CI as a separate statement that immediately follows the income statement