FAR 1.3 Comprehensive Inc Statement Flashcards
Where is Comprehensive Income reported?
What’s the difference?
Reported in a
Single-Statement Approach (One Income Statement starting with Sales Revenue)
or
Two-Statement Approach (The first statement is separate Income Statement and the second statement is the comprehensive statement which starts with Net Income)
What is the formula to calculate Changes in Accumulated Other Comprehensive Income (AOCI)?
Beginning Balance AOCI \+ Current Period OCI - Amounts reclassified from AOCI = Ending Balance AOCI
What is the formula to calculate Net realizable value?
Fair Value (Sale price of an Asset)
-
The costs of sell (Selling or Disposal Fee)
Why is the AOCI reclassification adjustment important?
1) Avoids double counting items that were included in both Net Income and OCI.
2) Ultimately moves OCI items from AOCI to the IS
(i. e., Moves previously reported OCI such as Unrealized gains to NI when they become realized during the current year).
What is the formula to calculate Comprehensive Income?
Net Income
+
Other Comprehensive Income
=Comprehensive Income
Name the 5 different transactions included in Other Comprehensive Income (OCI)
Pension Adjustment
Unrealized Gains and Losses (available-for-sale securities)
Foreign Currency Items
Effective Portion of Cash Flow Hedges
Revaluation Surplus (lFRS only)
What is the definition of Comprehensive Income?
All changes in equity during a period except those resulting from investments by owners and distributions to owners.
What is the definition of Other Comprehensive Income?
Revenues, expenses, gains, and losses that are
included in Comprehensive Income but excluded from net income (GAAP / IFRS).
What is the definition of Accumulated Other Comprehensive Income?
A component of equity that includes the total of
Other Comprehensive Income for the period and previous periods.
Where do you close Comprehensive Income at the end of the accounting period?
All components of Comprehensive Income is closed to the Balance Sheet.
Where do you close Other Comprehensive Income at the end of the accounting period?
Other comprehensive income is closed to Accumulated
Other Comprehensive Income just as Net Income is closed to Retained Earnings.
Where do you disclose the tax effect of each component of Comprehensive Income?
Either as part of the statement presentation or in the notes to the financial statements.
What items are considered cumulative accounting adjustments?
All related OCI transactions.
When are expenses recognized?
When they are incurred. Accrue if not yet paid.
What are accrued expenses?
Expense incurred but not paid.
