Question

4. Identify any five components of other comprehensive income?

Answer 1

Other Comprehensive Income (OCI) are referred to as those ttems of income and expenses which does not form part of Income Statement of entity. These are basically unrealised earnings of an entity. However as per accounting principles as these cannot form part of earnings of entity, they are represented as line item in the Income Statement.

Though Income statement is widely used to evaluate the performance of entity, the importance of OCI cannot be ignored. Analysis of Items forming part of OCI provides more transparency to the financial statements.

Items forming part of Other Comprehensive Income are as follow:

1. Remeasurement of employee defined benefit plans.

2. Fair value changes in case of Revaluation of Property, Plant and Equipment.

3. In case of entity engaged in Foreign Operations, Gain and Losses arising from translating the financial statements of foreign operation.

4. Gain or losses in case of financial assets having specified payment of principal and interest that are held for collection of contractual cash flows.

5. Gain or losses arising in case of investment in equity instruments designated at fair value.

6. Effecive portion of Gain and losses on hedging instruments in cash flow hedge.