Question

Question 1 1 pts Desert Company reported the following at December 31, 2019: Sales Revenue Cost of Goods Sold $2,040,000 $1,400,000 $220,000 Operating Expenses Unrealized holding gain on AFS debt securities $120,000 Cash dividends received on the securities $8,000 For 2019, Desert would report Other Comprehensive Income of: $428,000 $420,000 $128,000 O $120,000

Answer 1

Sales revenue, cost of goods sold and operating expenses are reported in income from continuing operation in income statement
Cash dividend is reported as other income in income statement
Other comprehensive income includes unrealized gain or loss earned by business
Desert would therefore report $120,000 as other comprehensive income which is unrealized holding gain
Scenario A
The unrealized loss on Hedging transaction of $10,000 is not included as part of ICO and reported as other comprehensive income
No, unrealized loss is not included in income from continuing operations (ICO)
2
This is not reported in ICO
3
The $10,000 of unrealized loss is included in ICO and thus will need to be reversed that is added back to Income from continuing operation.