FAR 1A3 CI Flashcards
What happens to other comprehensive income (OCI) at the end of each period?
✅ OCI is transferred to accumulated other comprehensive income (AOCI) each period. 🔄
Where is accumulated other comprehensive income (AOCI) reported on the financial statements?
✅ AOCI is reported as part of equity on the balance sheet.
What are some examples of OCI?
✅ Foreign currency translation gains/losses 💱
✅ Gains/losses (effective portion) on cash flow hedges 📉
✅ Unrealized holding gains/losses on available-for-sale (AFS) debt securities 💰
✅ Pension or postretirement gains/losses not recognized immediately 👴🏼
✅ Prior service costs or credits related to pensions/postretirement plans
What is the capital maintenance concept?
✅ It represents the recovery of cost and separates:
🔄 Return on capital from
🔄 Return of capital
How does the financial capital concept recognize price changes?
✅ Price changes on assets & liabilities are recognized as “holding gains and losses.”
✅ These are included in return on capital.
How does the physical capital concept recognize price changes?
✅ Price changes are recognized as “capital maintenance adjustments.”
✅ These are treated as a separate element of equity, NOT included in return on capital.
How is comprehensive income calculated?
✅ Net income ± Other Comprehensive Income (OCI) 🏦
✅ Includes all non-owner changes in equity.
Are items in other comprehensive income (OCI) reported net of tax?
✅ Yes, OCI items are reported net of tax. 💰
How is a change in accounting principle recorded?
✅ It is an adjustment to retained earnings. 🔄
What does comprehensive income include?
✅ All changes in equity except those from:
❌ Owner investments
❌ Owner distributions
How is revenue and expenses structured in a single-step income statement?
✅ All gains, income, and revenues are combined and reported as revenue. 📈
✅ All expenses, including costs and losses, are grouped together
How is a multi-step income statement structured?
✅ Separates operating and non-operating activities. 🔄
