Income statement

Question 0

What’s the purpose of reporting OCI?

Answer 0

The purpose of requiring the reporting of OCI is to report the net change in equity ( other than from transactions with owners ).

Question 1

What’s comprehensive income?

Answer 1

Comprehensive income is the sum of:

Net Income + Other Comprehensive Income

OR

CI = NI + OCI

Question 2

What are components of OCI?

Answer 2

1- Unrealized gains and losses on securities available for sale. Not trading which IS reported in net income.
2- Unrecognized pension and post retirement benefit cost and gains.
3- Foreign currency translation adjustments.
4- certain deferred gains and losses from derivatives.

These above items are typically reported net of taxes.

Question 3

What’s not included in OCI?

Answer 3

Prior period adjustments

Retrospective effects of changes in accounting principles.

Question 4

Net income and OCI are closed to what accounts at the end of accounting period?

Answer 4

Net income to Retained Earnings
OCI to AOCI ( Accumulated Other Comprehensive Income : which keeps track of all individual OCI accounts on yearly basis and reports them in B/S, just like RE is the accumulation of earnings from day one). Both RE and AOCI are B/S accounts.