Statement of Comprehensive Income Flashcards
what is other comprehensive income?
changes in equity that are excluded from NI because they are primarily FV gains or losses related to financial items and are not effective indicators of business performance
derived from non-owner sources
what 4 things are included in OCI?
- unrealized gains/losses on derivatives accounted for as cash flow hedges
- excess adjustments for the projected benefit obligation and the FV of defined benefit pension plan assets
- net unrealized holding gains/losses (noncredit related) on investments in available-for sale debt securities
not for those being transferred into held to maturity - foreign currency translation gains/losses
how does comprehensive income measure performance?
by calculating an entity’s change in equity from non-owner transactions and events
what is the formula for comprehensive income?
Net income + other comprehensive income
NI + OCI
difference between: foreign currency transaction and
foreign currency
translation
foreign currency transaction(exchange): gains/losses occur when a transaction will be settled through the
payment/receipt of foreign currency. reported in NET INCOME not OCI
foreign currency translation: gains/losses occur when subsidiaries F/S are denominated in a foreign currency
and translated into US dollars for consolidation purposes.
included in OCI
COGS is the cost associated with the goods that were sold so its a….
decrease from NI
gain on sale of long term asset (like equipment) is included in…
net income
what two formats can comprehensive income be disclosed in?
- at the bottom of the income statement, continue from NI and add OCI to arrive at comprehensive
income for the year - in a separate statement, start with NI and add OCI to arrive at comprehensive income for the year
TRUE OR FALSE
comprehensive income is on the statement of shareholder’s equity and after Retained earnings
FALSE
how is net of tax treated in respect to OCI (no FV elected)?
it needs to be taken out (credit) to avoid counting the gains twice (debit)
how is net of tax treated in respect to OCI (FV elected)?
all the unrealized gains and losses would be included in earnings during the period incurred
what are the 10 key elements of F/S?
- Assets
- Liabilities*
- Equity
- Investment by owners
- Distribution to owners
- Revenue
- Expenses
- Gains
- Losses
includes deferred revenue
treasury stock is deducted from…
stockholder’s equity, it is not a component of OCI
TRUE OR FALSE
OCI is reported net of tax
TRUE
if FV option is not selected, held-to-maturity securities are reported at…
amortized cost
TRUE OR FALSE
at the end of every period, OCI (temporary account) is transferred and closed to AOCI (permanent account)
just like the close of NI to RE
TRUE
TRUE OR FALSE
OCI and AOCI will be equal after a business’ first year of operations
TRUE
TRUE OR FALSE
OCI specifically includes fair value changes from assets and liabilities in an accounting period
TRUE
accumulated other comprehensive income is an…
equity account that collects all such transactions from a company’s history
gains and losses from early extinguishment of debt are recognized as components of __________
because the amounts are not directly related to FV: similar to gains and losses on disposal of fixed assets
net income
