Question

1. What is the relation between Accumulated Other comprehensive Income ( AOCI) and Other comprehensive Income ( OCI) ..

2. . In what way is AOCI similar retained earnings, besides the fact that they are both equity accounts?

3. What are the two formats that companies can use to present their Statement of Comprehensive Income?

Answer 1

1. Other comprehensive income includes unrealised gains and losses that are reported in the equity section of the balance sheet. E.g., An unrealiser gain or loss when an investment or hedged transaction has appricated or depricated in fair value but the sale transaction has not yet occurred to realise gain or loss.

OCI allows to certain assets and liabilities revaluation to bypass income statement and reported directly in Share holder's equity.

OCI is a temporary account and is closed into AOCI at the end of the accounting period.

2. It is similar in the way that net incomes are closed in retained earnings account, and OCI are closed in accumulated other comprehensive income.

3. Formats
OTHER COMPREHENSIVE INCOME Other comprehensive income, net of tax, exchange differences on translation Other comprehensive income net of tax, available-for-sale financial assets Other comprehensive income, net of tax, cash flow hedges Other comprehensive income net of tax, hedges of net investments in foreign operations Other comprehensive income, net of tax, gains (losses) from investments in equity instruments Other comprehensive income, net of tax, gains (losses) on revaluation Other comprehensive income, net of tax, actuarial gains (losses) on defined benefit plans Income (expense) recognised in other comprehensive income relating to non-current assets or disposal group classified as held for sale