FAR 1 - M7 STMT OF COMPREHENSIVE INC Flashcards
Cash flow hedge types
Effective portion is included in OCI
Ineffective portion is recognized in curr year earnings
Does comprehensive include all changes in equity? What are the exceptions?
Yes, comprehensive income includes all changes in equity during a period EXCEPT those resulting from OWNER INVESTMENTS and DISTRIBUTIONS TO OWNERS
How do you calculate comprehensive income
Net income + Other Comprehensive Income = Comprehensive income
What are examples of comp income
Pension Adjustments Unrealized gain / loss on Avail-For-Sale securities Foreign currency translations Instrument Specific Credit Risk Effective Portion of Cash Flow Hedges
Where is Accum Other Comp Income reported?
AOCI is reported in the Balance Sheet (aka Stmt of Financial Position)- treated like R/E; shown in the Equity section also
shown after R/E and before Treasury Stock:
Retained Earnings
Accum Other Comp Income
Treasury Stock (owner transactions)
What is the purpose of reclassification adjustments shown in the FS that discloses comp income?
To avoid double counting in comprehensive income items which are currently displayed in net income.
This is done by moving OCI items from AOCI to the income statement
OCI Component Reclassification Adjustment
Unrealized gains/losses on AFS investment Reclassified when the investment is sold, and the gain or loss thus realized.
Foreign currency translation adjustments Reclassified when the investment in the foreign entity is sold or liquidated.
Cash flow hedges The effective portion of the hedge is reclassified when the forecasted transaction it provided the hedge for takes place.
What is the purpose of reporting comprehensive income?
To summarize all changes in equity (net income) from nonowner sources.
How do you present the OCI on the Income Stmt?
Shown as net of tax for individual components of OCI
OR
Before tax with an aggregate tax amount after these items
How is comprehensive income per share reported in the I/S?
This is the requirement: comp inc per share IS NOT REPORTED!
When translating a foreign financial stmt, where would gain (loss) from remeasurement and translation be reported?
Remeasurement method - currency gain or loss is reported in net income as a plug
Translation method - currency gain or loss is reported as part of OCI also as a plug
Tax reporting issue pertaining to OCI
The individual components of OCI may be either reported as net of tax OR before tax basis with an aggregate tax amount reported after these items
Available for sale securities - how are realized and unrealized gains reported?
Realized gain(loss) from sale of available-for-sale securities are part of net income.
Unrealized gain(loss) from sales of available-for-sale securities are components of comprehensive income
