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Assume the fair value option for financial assets and liabilities is not elected. Which of the...

Assume the fair value option for financial assets and liabilities is not elected. Which of the following would not be an item classified separately under other comprehensive income?

1) Foreign currency items

2) Adjustments to record funded status of pension plans

3) Unrealized gains (losses) on available‐for‐sale debt securities

4) Gains (losses) on sale of treasury stock

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Answer #1

Solution:

If the fair value option for financial assets and liabilities is not elected, "Gains (losses) on sale of treasury stock" would not be an item classified separately under other comprehensive income.

Other comprehensive income items should be classified based on their nature. Therefore, there should be separate classifications for foreign currency items, pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. Gains (losses) on the sale of treasury stock result from a transaction with owners in their capacity as owners and are not included in comprehensive income.

Hence 4th option is correct.

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