FAR Updates - Comprehensive Income Statement Reporting Flashcards Preview

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Flashcards in FAR Updates - Comprehensive Income Statement Reporting Deck (11):
1

True or False Both US GAAP and IFRS allow Statement of Comprehensive Income to be presented using the Single-Statement Approach (Statement of Comprehensive Income) or the Two-Statement approach (Statement of Income) immediately followed by Separate statement of Comprehensive Income)

True

2

What is the Single Statement Approach on Comprehensive Income?

Single statement approach:

(1) one financial statement showing both Income Statement Items and Comprehensive income Items.

(2) Comprehsnive Income items are shown individually:

For example:

Other Comprehensive income, net of income tax:
Pension net gain (or net loss)
Unrealized holding gains (loss) (AFS securities)
Foreign currency items
Effective Cash Flow hedge
Revalulation surplus (IFRS only)

Total Other Comprehsnive income

Comprehensive Income (*regular Income statement's net income + Other Comprehensive income total)

3

Name all the Account Items (in order) being shown on the Single Statement Approach on Comprehensive Income

Revenues
Expenses
Income before income taxes
Income tax
Net income

Other Comprehensive income, net of income tax:

Pension net gain (or net loss)

Unrealized holding gains (loss) (AFS securities)

Foreign currency items

Effective Cash flow hedges

Revaluation Surplus (IFRS only)

Other Comprehensive income (total) Comprehensive Income (combined overall total)

4

What is the Two-Statement Approach on Comprehensive Income?

Shows two separate financial statements on income

(1) Income Statement

and then

(2) Statement of Comprehensive Income (shown as follows)

Net Income                                    $1,200,000

OCI, net of income tax:

Pension net gain (or net loss)            (25,000)

Unreal. holding gains (loss) (AFS)      300,000

Foreign currency items                       (75,000)

Effective Cash flow hedges                 10,000

Total Other Comprehensive income  210,000  
                                                                ---------

Comprehensive Income                    1,410,000

 

IFRS version

--------------

Net Income                                  $1,200,000

OCI, net of income tax:

Pension net gain (or net loss)          (25,000)

Unreal.holding gains (loss) (AFS)     300,000

Foreign currency items                    (75,000)

Effective Cash flow hedges             10,000

Revaluation Surplus (IFRS only)         2,000
                                                             --------

Total Other Comprehensive income  212,000 Comprehensive Income                     1,412,000

5

Comprehensive income can be shown as either (1) net of ____ or 92) Before ___ with one amount shown for Aggregate Income ___ or ____.

Comprehensive income can be shown as either (1) net of TAX or (2) Before TAX with one amount shown for Aggregate Income TAX or BENEFIT.

6

How does Other Comprehensive income statement look like in using the reporting method of "Before TAX with one amount shown for Aggregate Income TAX or BENEFIT?"

Net Income                                                   1,200,000

Other Comprehensive income:

Pension net gain (or net loss)                           (26,000)
Unreal. holding gains (loss) (AFS securities)   301,000
Foreign currency items                                     (74,000)
Effective Cash flow hedges                                11,000
OCI before income tax                                      212,000
Income Tax Expense or Benefit                       (2,000)
                                                                               -------
Other comprehensive income                       210,000

Comprehensive income                                1,410,000

 

IFRS version
--------------------

Net Income                                                        1,200,000

Pension net gain (or net loss)                              (26,000)
Unreal. holding gains (loss) (AFS securities)       301,000
Foreign currency items                                         (74,000)
Effective Cash flow hedges                                    11,000
Revaluation Surplus (IFRS only)                              3,000

OCI before income tax                                           215,000
Income Tax Expense or Benefit                               (5,000)
Other comprehensive income                                210,000
Comprehensive income                                         1,410,000

7

How are to show Income Tax Expense or Income tax benefit on Comprehensive income?

Allocated the income tax expense or benefit to each Comprehensive income items (Pension, Unrealized gains/losses AFS, Foreign Currency Translation, Effective cash flow hedge, Revaluation surplus (IFRS only)) via two ways:

(1) Disclose on the face of Comprehensive Income or
(2) Disclose in Notes to the Financial statements

8

How are Comprehensive Income reported during Interim Periods?

The Total Comprehensive income amount is reported in CONDENSED Financial statements of Interim Periods issued to shareholders.

Otherwords: Interim Periods Financial Statements are condensed (short-version looking F/S) that includes a "Total comprehensive income amount" as one line item.

See http://www.norsat.com/wp-content/uploads/Condensed-Interim-Consolidated-Statements2.png

9

What are the Required Disclosure Items for comprehensive income?

(1) Show tax effects on each current Other comprehensive income item Directly on the Statement presentation or Notes to the Financial Statements

(2) Show the Changes in Accumulated Balances for each Other Comprehensive income item, i.e.:

Pension Adjustments
Unrealized holding gains/losses on AFS securities Foreign Currency translation
Effective portion of Cash-flow hedges
IFRS Revaluation surplus

Show these Changes in accumulated balances either
(1) on the Financial statement itself,
or (2) in Notes to Financial Statements

(3) Show "Total Accumulated Other Comprehensive Income" on the Balance Sheet under the Equity section. [FYI - Accumulated Other Comprehensive Income = Equity item on balance sheet]

(4) Reclassification Adjustments:
- Used to avoid double counting in other comprehensive income items (shown in Current Year's net income)

(a) Required Disclosure on: - Changes in AOCI balacnes by Other Comprehensive income component via Separate disclose
    (i) Reclassification Adjustmetns
     and (ii) Current-period OCI - Signification items reclassified out of AOCI via report directly on Financial Statement or notes to Financial Statements

(b) Display OCI component amounts as "before-tax" or "net of tax" (after tax) (reported directly on F/S or in notes to F/S)

10

Example of Changes in AOCI by Component

Components      Gains/losses on CFLO hedge
Beg. Bal.                            $2000
OCI b/f Reclass                  3000
Amts. reclass from AOCI   (500)
                                            --------
Net current period OCI      2,500
                                             --------
End Balance                      4,500

Notes: All amounts are net of tax. Therefore, an additional footnote would disclose the tax effects. Other columns would be added if Brown had other components of OCI in its financial statements.

11

Example of Significatn items reclass out of ACOI

Details AOCI Comp.             Amnt reclass from AOCI

Gains and losses on CFLO

Interest rate contracts         $3,000 Int. inc/(exp) 

Commodity contracts         (3,750) cost of sale

                                            -------------
                                           (750) total b/f tax
                                           250 Tax (exp) or ben
                                           --------------

Total reclass.                          $(500) net of tax

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