BS/IS/ Comprehensive Income "OCI" "ACI"

Question 1

How are taxes reported on the income statement?

Answer 1

Net of tax…
If the year had a loss, tax reduces that loss.
If the year had gain, tax reduces that gain.

Question 2

What are some differences between OCI and AOCI

Answer 2

OCI changes from sources that are non-owner specific. Has five categories.
Is reported on the income statemen tor statement of comprehensive income.

AOCI is collective amount of OCI at a specific time.
Reported on the balance sheet

OCI is transferred to AOCI at the end of every month.

Question 3

What is OCI made up of?

Answer 3

“DENT” or “Derivative cash flow hedges are put in a CUP”

Derivative Cash Flow Hedges
Excess adjustment of Pension Plans
Net unrealized holding Gains/Losses on AFS debt securites
Translation adjustments from foreign currency

Question 4

How is the gain/loss on foreign currency handled when it crosses years?

Answer 4

First you have to have the original spot rate when the transaction occurred.

Secondly you have to recognize a gain or loss at EOY with that spot rate.

Finally you recognize another gain or loss at the time the transaction is fullfilled/complete and add/subtract from EOY NOT when the transaction occurred.

Question 5

What is a cash deposit considered on the balance sheet?

Answer 5

It is considered noncurrent asset IF it is fully refundable and is likely to BE refunded.

Question 6

What is comprehensive income?

Answer 6

Comprehensive income is: Net Income + Other Comprehensive Income.

AOCI is not included in any of that conversation ignore it.

Question 7

Where is the noncontrolling interest of a subsidiary reported?

Answer 7

As equity on the balance sheet.

Question 8

How is a discontinued component of the business handled on the income statement?

Answer 8

The losses are included in the income statement within the “LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS”

Question 9

What is the focus in a multi-step income statement?

Answer 9

To calculate operating profit instead of just income from continuing operations.

Question 10

What are Foreign Currency Translation, Transaction, and Remeasurement differences?

Answer 10

Remeasurement deals with the company’s net income.

Transaction normal business flows to gain/loss of income from continuing operations

Translation deals with other comprehensive income.

Question 11

What is the entry to utilize a prepaid and its effect on financials?

Answer 11

Dr. Expense… decreases equity
Cr. Prepaid… decreases assets