Homework - Ch 18

Homework - Ch 18 - Exercise 18-1 Requirement 1...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Exercise 18-1 Requirement 1 Comprehensive income is a more expansive view of the change in shareholders’ equity than traditional net income. It is the total nonowner change in equity for a reporting period. In fact, it encompasses all changes in equity other than from transactions with owners. Transactions between the corporation and its shareholders primarily include dividends and the sale or purchase of shares of the company’s stock. Most nonowner changes are reported in the income statement. So, the changes other than those that are part of traditional net income are the ones reported as “other comprehensive income.” Requirement 2 Two attributes of other comprehensive income are reported: (1) components of comprehensive income created during the reporting period and (2) the comprehensive income accumulated over the current and prior periods. The second measure - the comprehensive income accumulated over the current and prior periods – is reported in the balance sheet as a separate component of shareholders’ equity. This is what Kaufman reported in its balance sheet ($107 million in 2006). Be sure to realize this amount represents the cumulative sum of the changes in each component created during each reporting period (the disclosure note) throughout all prior years.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Exercise 18-1 (continued) Requirement 3 Kaufman's 2006 balance sheet amount ($107 million) differs from the 2006 amount reported in the disclosure note. On the other hand, the comprehensive income created during the reporting period can be reported either (a) as an additional section of the income statement, (b) as part of the statement of shareholders’ equity, or (c) in a disclosure note. This is the measure of comprehensive income Kaufman reported in the disclosure note. Regardless of the placement a company chooses, the presentation is similar. It will report net income, other components of comprehensive income, and total comprehensive income, similar to the following: ($ in millions) Net income $xxx Other comprehensive income: Net unrealized holding gains (losses) on investments (net of tax)† $ x Net unrecognized loss on pensions (net of tax)‡ (x) Deferred gains (losses) from derivatives (net of tax) § x Gains (losses) from foreign currency translation (net of tax)* x xx Comprehensive income $xxx Changes in the market value of securities available-for-sale.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 9

Homework - Ch 18 - Exercise 18-1 Requirement 1...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online