Comprehensive Income

Question 1

Comprehensive Income presentation

Answer 1

1. as separate statement beginning net income
2. statement of earnings and comprehensive income
3. part of statement of stockholder’s equity

IT SHOULD NOT BE REPORTED IN THE STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY!!!!

Question 2

Comprehensive income components

Answer 2

Derivative cash flow hedge gain/loss
Excess adjustment of pension PBO and FV of PA
Net Unrealized G/L on AVS (net of reclass adj)
Translation adjustment of Foreign currency

Question 3

Reclassification adjustment included in Comprehensive income is (2,450) net of tax of 30%
What was the corresponding amount of income previously reported in the IS?

Answer 3

2,450 /.70 = 3,500

since the negative amount of 2,450 was deducted in the CI, the gross amount of 3,500 must have been previously added to Other Revenues and Gains.
Remember that other revenues and gains are not reported net of tax

Question 4

Is a separate EPS amount required to be presented for Comprehensive Income?

Answer 4

NO

only Income from Continuing Operations and Net Income (also discontinued operations and extraordinary items)

Question 5

Comprehensive income and its components should be presented

Answer 5

displayed in a financial statement that has the same prominence as other financial statements

Question 6

Comprehensive income components MAY BE displayed

Answer 6

NET of related tax effects
OR
BEFORE RELATED TAX EFFECTS with one amount shown for aggregate income tax effect