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Chapter 4: Q36Q (page 181)

Question: What are the two ways that other comprehensive income may be displayed (reported)?

Short Answer

Expert verified

The other comprehensive income can be displayed by using the following approaches:

  • Single statement approach

  • Two statements approach

Step by step solution

01

Meaning of Other Comprehensive Income

Other comprehensive income is excluded from the net income determined in the income statement because it consists of the revenues, gains, losses, and expenses that are not realized yet by the business entity.

02

Explanation of single statement and two statement approaches

In the single statement approach, the other comprehensive income is shown in a combined manner with the net income obtained by abusiness concern.

In comparison, the two statement approach prepares two statements. The first one computes net income, and the second statement adjusts the net income with the other comprehensive income.

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Most popular questions from this chapter

Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:

Cost of goods sold \)330,000

Salaries and wages expense 120,000

Income tax expense 25,000

Increase in value of company reputation 15,000

Other operating expenses 10,000

Unrealized gain on value of patents 20,000

Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.

In 2017, Hollis Corporation reported net income of \(1,000,000. It declared and paid preferred stock dividends of \)250,000. During 2017, Hollis had a weighted average of 190,000 common shares outstanding. Compute Hollis’s 2017 earnings per share.

Identify at least two situations in which important changes in value are not reported in the income statement.

Question: What is the major distinction (a) between revenues and gains and (b) between expenses and losses?

Presented below is information related to Viel Company on December 31, 2017, the end of its first year of operations.

Sales revenue $310,000

Cost of goods sold 140,000

Selling and administrative expenses 50,000

Gain on sale of plant assets 30,000

Unrealized gain on non-trading equity securities 10,000

Interest expense 6,000

Loss on discontinued operations 12,000

Allocation to non-controlling interest 40,000

Dividends declared and paid 5,000

Instructions

Compute the following: (a) income from operations, (b) net income, (c) net income attributable to Viel Company controlling shareholders, (d) comprehensive income, and (e) retained earnings balance on December 31, 2017. (Ignore income taxes.)
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