Comprehensive Income

Question 1

Comprehensive Income - What is “E” in PUFER ?

Answer 1

“E” Effective Portion of Cash Flow Hedges

Gains Only , When the cash flow associated with the hedge is realized, the figure then can be transferred to Net Income.

Question 2

Comprehensive Income - What is “F” in PUFER ?

Answer 2

“F” Foreign Currency Items

• Foreign Currency Translation Adjustments.
• Gains and Losses on Foreign Currency Transactions that are designated as economic Hedges of a net investment in a foreign entity.

Both could be transferred to net income when foreign entity investment is sold or liquidated.

Question 3

Comprehensive Income - What is “U” in PUFER ?

Answer 3

“U” Unrealized Gains and Losses on Available for Sale Securities. Would transfer to Net Income when realized.

Hint - Unlike available for sale securities unrealized gains and losses from Trading Securities would be included in Net Income for the period.

Question 4

Comprehensive Income - What is “P” in PUFER ?

Answer 4

“P” Pension Adjustments

• Both Gains and Losses
• May be Transferred to Net Income when recognized as a component of Net Periodic Benefit Cost

Under IFRS the Gains and Losses that are transferred to OCI may not be reclassified into Net Income.

Question 5

Comprehensive Income - What is “R” in PUFER ?

Answer 5

“R” Revaluation Surplus

• IFRS Only
• Gains only

may not be reclassified into Net Income but could be transferred directly to Retained Earnings.

Question 6

Comprehensive Income - How often would Comprehensive Income be reported in a company’s financial statements ?

Answer 6

Comprehensive Income must be reported Quarterly and Annually.

Question 7

Comprehensive Income - Where would Comprehensive Income be reported in a company’s financial statements?

Answer 7

Comprehensive Income could be reported in a separate statement named “ Statement of Comprehensive Income”, or it could be combined with the Income Statement.

Question 8

Comprehensive Income - Where would “AOCI” Accumulated Other Comprehensive Income be reported in the financial statements?

Answer 8

AOCI would show as part of Stockholder’s Equity section of the Balance Sheet. (just like Retained Earnings are)

Question 9

Comprehensive Income - What are the main items that make up comprehensive income? What are the end of the year adjustments to the components of Comprehensive Income?

Answer 9

Comprehensive Income = Net Income + OCI

End of the Year Adjustments :

• Net Income Closes to Retained Earnings
• OCI closes to AOCI