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What is the definitions of Comperhensive Income?
it is the change in equity (net Assets) of a business enterprise during a period form transactions and other events and circumstance from non-owner sources.
What does Comrehensive income include?
It includes all changes equity during a period except those resulting from ivestments by owners and distributiosn to owners.
Identify the Components of Other Compreshensive Income using the PUFER mnomic.
- P- pension adjustments.
- U- unrealised gains and losses (avaliable for sale securities).
- F- Foreign currency items
- E- Effective portion of cash flow hedges
- R- revuluations surplus (only under IFRS)
what is the equations to calculate OCI?
- Net Income
- + OCI (equal to PUFER)
- = Comprehensive Income
What is the closing process for Net Income?
Net income is closed to the statment of retained earnings which is closed to equity.
what are the items included within net income?
- 1) income from continuing operations
- 2) income form disconinued operations (reported net of Tax on IS)
- 3) income from Extraordinary Items (reported net of tax on IS)
Where is Other Comprehensive Income closed to?
OCI is closed direct to equity?
When are changes in pension adjustments reported and where are they reported?
they are reported in the year the changes occure and they are reported in OCI untile they are recognized as a net periodic benefit cost on the IS.
When are unrealized gains and losses on avaliable fr sale securities reported and hwere are they reported?
they are reported as a component of OCI untile they are sold. they are reported in the pierod the lose are gain is incurred.
what are types of unrealized gains and losses?
- 1) unrealized holding gains and losses on avaliable for sale securities.
- 2) unrealized holding gains and losses that reslt form debt security being transfered into the valailable for sale category from held to maturity.
- 3) decreases or increases in the fair value of available for sale securities previously written down as impaired.
How is forign currency items handeld within OCI?
Forign currency items that are disignated as economic hedges of net investments in foreign entity are reported as a component of OCI in remain in OCI until the sale of the investment in the foreign entity. (the hedge stays in OCI untile it is no longer needed)
How is the effective portion of Cash flow Hedges handeled within OCI?
the hedge is reported as a component of OCI until the cash flow assocaited with the hedged item are realized.
What is the purpose of reclassification adjsutments.
they avoid double counting by moving OCI income from accumulated OCI to the income satment. This is also the way items go from OCI to teh income statment.
What is accumulated Other Comprehensive Income
Other Comprehensive incom is a component of equitythat icnludes the total of OCI from previous periods. OCI for the current perid is closed to this account.
How is compreshensive income presented under US GAAP.
- it can be presented in the followings ways:
- 1) sing statement approach
- 2) an income statment followed by a separate statement of comprehensive incom that begins with net income ( AKA two statment approach)
- 3) a statement of changed in equity. This is ending soon.
comonents of OCI is reported what way?
- 1) net of tax,
- 2) before related tax effects with one amount shown for the aggrate income tax expense or benefit related to the total of ther OCI items.
how is the OCI icnome tax expense or benefits disclosed?
they are disclosed eer on the face of the statement in which those components are displayed or in the notes to the financial statments.
How is comprehensive income treated for interim period reporting purposes?
Total comprehensive income shall be reported in condensed financial statementss of interim periods issued to shareholder.
For Comprehensive income what must be disclosed?
- 1) the tax effects of each component includein in the current OCI.
- 2) the changes in the accululated balances of each component of OCI
- 3) the toatl accumulated OCI in the balance sheet as an item of equity
- 4) the recallsificaiton adjustments and the effects of those adjustments on net income, and OCI.
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