ACC 309 - Milestone 1 - Management Brief.docx - Milestone 1 Management Brief ACC 309 \u2013 Intermediate Accounting III Callie Barnes Other Comprehensive

ACC 309 - Milestone 1 - Management Brief.docx - Milestone 1...

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Milestone 1: Management Brief ACC 309 – Intermediate Accounting III Callie Barnes
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Other Comprehensive Income As Peyton Approved has grown and changed, so has their way of accounting. Peyton Approved will need to analyze and address two different areas of income: net income and other comprehensive income. The calculation for net income is simple, as it is the sum of all the revenue for that period and subtract the total number of expenses. Comprehensive income on the other hand, is calculated by adding the net income plus all other comprehensive income such as unrealized revenue, marketable securities and unrealized losses or gains under both GAAP and IFRS that are excluded from the net income (Bragg, 2019) . For this accounting period, Peyton recorded their marketable securities at a cost of $5,000,000.00, which are available for sale. However, the market value of these securities is $5,235,000.00. This leaves the company with a difference of $265,000.00, which we have recorded under the “unrealized gain/loss on marketable securities for sale”. Because the marketable securities are for sale and have not yet been sold, these securities as well as the gain on them, will be recognized as other comprehensive income. These items are considered unrealized because the transactions have yet to be completed. Once the securities are sold, the gain will be realized which then allows it to become part of the net income calculation (Bragg, 2019). Shareholder’s Equity Shareholders equity can be defined as “the residual interest of the shareholders in the assets of the corporation, after deducting liabilities” (Whalen, Jones and Pagach, 2017). In other words, shareholders equity is the amount of funds left over after all dividends have been issued.
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