ch13c - Comprehensive Income Comprehensive income is...

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Unformatted text preview: Comprehensive Income Comprehensive income is defined as all changes in stockholders’ equity during a period, except those resulting from dividends and stockholders’ investments. Comprehensive in- come is computed by adding or subtracting other comprehensive income from net income as follows: Net income $XXX Other comprehensive income XXX Comprehensive income $XXX Other comprehensive income items include unrealized gains and losses on available- for-sale securities as well as other items such as foreign currency and pension liability adjustments. The cumulative effect of other comprehensive income is reported on the balance sheet, as accumulated other comprehensive income. Companies may report comprehensive income in the financial statements as follows: 1. On the income statement 2 In a separate statement of comprehensive income 3. In the statement of stockholders’ equity Companies may use terms other than comprehensive income, such as total nonowner changes in equity. In the earlier illustration, Maggie Company had reported an unrealized gain on available-for-sale investments of $1,300. This unrealized gain would be reported in the Stockholders’ Equity section of its 2009 balance sheet as follows: Maggie Company Balance Sheet December 31, 2009 Stockholders’ equity: Common stock ........................................................ $ 10,000 Paid»in capital in excess of par value ......................................... 150,000 Retained earnings ...................................................... 250,000 Plus unrealized gain (loss) on available—forsale investments ......................... 1,300 Total stockholders’ equity .................................................. $411 ,300 Chapter 13 Investments and Fair Value Accounting 589 Alternatively, Maggie Company could have reported the unrealized gain as part of accumulated other comprehensive income as follows: Maggie Company Balance Sheet December 31, 2009 Stockholders' equity: Common stock ........................................................ $ 10,000 Paid-in capital in excess of par value 150,000 Retained earnings ...................................................... 250,000 Accumulated other comprehensive income: Unrealized gain on available-forsale investments .............................. 1,300 Total stockholders' equity .................................................. $411,300 ...
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