Statement of Comprehensive Income

Question 1

Comprehensive Income Definition

Answer 1

items that bypass the income statement

Question 2

What does Comprehensive Income include

Answer 2

all changes in equity during a period except those resulting from investment by owners and distributions to owenrs

Question 3

Comprehensive Income Examples

Answer 3

• Translation gains and losses on FX
• Pension over/under funded calculation
• Gains and losses on cash flow hedging derivative instruments
• unrealized holding gains/losses on available-for-sale debt securities
• For Financial liabilities measured using the FVO in ASC 825, the change in fair value caused by a change in instrument specific credit risk (ie. the entity’s own credit risk)

Question 4

Two ways to report Comp Income

Answer 4

One-statement approach (combined
two-statement approach

Question 5

What is combined (one statement) approach

Answer 5

traditional net income is a subtotal, with total Comp Income shown as final total
advantage: creation of a new FS not necessary
disadvantage: net income is buried

Question 6

What is two-statement approach

Answer 6

reports comp income in a separate statement which indicates that the gains and losses identified as other comprehensive income have the same status as traditional gains and losses

Question 7

Purpose of reporting comprehensive income

Answer 7

To summarize all changes in equity from nonowner sources