Statement of Comprehensive Income

Question 1

What is Comprehensive Income (Formula)?

Answer 1

Sum of Net Income and Other Comprehensive Income

Question 2

What ASU aligned U.S. GAAP presentation of Comprehensive Income with IFRS?

Answer 2

ASU Topic 220

Question 3

Is earnings per share calculated for Other Comprehensive Income?

Answer 3

No

Question 4

What are the two ways Comprehensive Income can be disclosed in the financial statements?

Answer 4

1. ) Single Statement of comprehensive Income - Combines Comprehensive income with the income statement to get to net income as a subtotal
2. ) Two Statements - A separate Income statement is presented immediately before the state of comprehensive income. The Net Income from the first statement (IS) is used as the beginning amount for the second statement, which state Comprehensive income

Question 5

Using the two statement approach to disclose Comprehensive Income, can a company elect to begin with or without net income on the second statement?

Answer 5

Yes

Question 6

What is the purpose of reporting Comprehensive Income?

Answer 6

To report the net change in equity (other than transactions with owners) in a single amount and to provide a more complete picture of the total earnings of the firm for a period.

Question 7

What are the two components of Comprehensive Income?

Answer 7

Net Income and “Other” Comprehensive Income

Question 8

What are some examples of “Other Comprehensive Income”?

Answer 8

1. ) Unrealized gains and losses on securities available for sale
2. ) Unrecognized Pension and post-retirement benefit cost and gains
3. ) Foreign Currency translation adjustments
4. ) Certain deferred gains and losses from derivatives

Question 9

Are OCI items usually reported net of tax?

Answer 9

Yes. Firms may opt to report each item on a pretax basis with the net aggregate income tax effect reported as a separate item

Question 10

What two main things (Other than items reported in Net Income) does OCI not include?

Answer 10

1. ) Retrospective effects of changes in accounting principles
2. ) Prior Period Adjustments

Question 11

What is Accumulated Other Comprehensive Income (AOCI)?

Answer 11

Amount carried over from the previous period, and then either increased or decreased during the current period. This is the running total of Other Comprehensive income items. Must be separately displayed in the owners’ equity section