Question

11. What are the two formats that companies can use to present their Statement of Comprehensive Income? 0.3 pts 2. Choose two companies and get their annual reports. 3. For each company, obtain the balance sheet, income statement, and statement of comprehensive income. Put only these pages in a PDF document (or two) and highlight the accounts and other fields (company names and dates) listed in the attached spreadsheet unto the PDF financial statements (for example, net income on the income statement). (2 points, max half credit if not highlighted; penalty if you attach the entire annual report). Please attach. I will accept attachment in Word, but I prefer a separate file submitted alongside this Word file. 4. Complete the cells in the spreadsheet provided (or copy and paste below). Dollar amounts must be formatted properly (for example 1,000; not 1000). Also, you must present both companies using the same dollar scale. For example, you cannot present one company in thousands and the other in millions. You can choose any scale, but both companies must be presented in and/or converted into the same scale. (3.2 pts) Copy and paste if you prefer to combine the spreadsheet and the Word file. 5. Explain the difference between comprehensive income and other comprehensive income. (1/2 pt) 6. What is the relationship between accumulated other comprehensive income (AOCI) and other comprehensive income? Hint: calculate the difference between beginning and ending AOCI. (1/2 pt) 7. In what way is AOCI similar retained earnings, besides the fact that they are both equity accounts? (1/2 pt)

Answer 1

Answer 5 – Explain difference between Comprehensive Income and “ Other Comprehensive Income” – Interesting topic to discuss

One of the Important factor is majority high value base company use “ Other Comprehensive Income .Other comprehensive Income mainly cover following details ( Expenses ) –

1. Gain & loss from derivative – Financial instrument
2. Any unrealized gain / loss from Debt Securities – Financial Instrument
3. Actuarial Gain and Loss and Impact of tax on the same
4. Foreign currency transaction

Other comprehensive Income appear absolutely separate line item

Where as Comprehensive Income represents more clear view on Income and Revenue

Comprehensive Income consist of major two sections :

The net Income from the Income Statement

The Net income from the Other comprehensive Income Statement

Answer 6 – What is the relation between Accumulated Other comprehensive Income ( AOCI) and Other comprehensive Income ( OCI) ..

Let explain about what is the meaning of “ Accumulated Other Comprehensive income ( AOCI) – definitely this is part of Equity part under “ Balance Sheet “ . Most important to note that this section cover all Unrecognised gain and losses . Mostly we noticed that In case of Bond Investment , any gain / losses in Fair Value of Bond parked under “ Other Comprehensive Income “ until its realized .

Normally Unrecognised gain and losses that may be aggregate under the “ cumulated Other comprehensive Income “ –

1. Particularly under Financial Instrument as per IFRS 9 – Under Available for Sale ( AFS ) – any unrecognised gain / loss on Investment
2. Another important disclosure of change in foreign currency translation – Gain / Losses
3. Actuarial Gain/ losses – under Defined benefit plan

Most important point to note in case of AOCI and OCI mainly cover “ an Unrealized gain and loss means that No sell transaction has been occurred . This section mainly cover unrealized gain / loss of Investment ( Financial instrument) based on Fair Value ( Most important point to note .. Movement of Fair value – Notional amount ) of the security as of the Balance Sheet date . In summary , Unrealised gain / loss – movement of Fair value – Financial Instrument – parked under “ AOCI and OCI “

Answer 7 – In what way AOCI is similar retained Earnings – As already explained above , AOCI or OCI ( Other Comprehensive Income ) must have separate line item under “ Equity “ . This AOCI cover mainly Unrealised gain / loss in case of financial instrument – movement of fair value . This section not part of normal Revenue , expenses and generate “ Retained Earnings “ . In the financial Statement , AOCI is classified under “ Other comprehensive Income” and complete separate from “ Retained Earnings “

Answer 1 – What are the two formats that companies can use to present their Statement of Comprehensive income -

A statement of comprehensive Income contains Two Main things :

1. Net Income
2. Other comprehensive Income

Net Income consist of which is part of Income Statement ( derived in general movement of Revenue and Expenses ) and other way OCI cover all which not covered under Net Income Method

As already explained above , OCI mainly consist of unrecognised movement of fair value – Gain / Loss which all never cover up under “ net Income” Like

1. Pension fund – Actuarial gain & loss – under defined benefit plan
2. Adjusted foreign currency transaction movement
3. Gain & loss – derivative movement
4. Available for sale – investment – unrealized gain & losses

Where as net Income mainly consist of Revenue and Expenses includes Interest , Income Taxes along with Other operation expenses , operation from discontinued and continues service .