In: Accounting
If a business has $100,000 in net income, $20,000 in advertising expenses, $10,000 in accounting fees, and a $40,000 positive effect in foreign currency adjustments, then what is their comprehensive income?
Income Statement comprises of
Profit / Loss for the period + Other comprehensive Income = Total comprehensive income
Profit / Loss for the period means Total of income less all expenses , excluding the all other comprehensive income .
Other comprehensive Income Means all income and expenses of company which are not recognized in profit and loss statement , these are all expenses and incomes which refers to current year or pervious year but which are not yet realized.
In given case $20000 which are advertising expenses and $10000 accounting fees are already been recognized in income statement
so Foreign currency adjustment are shown in income statement as other comprehensive income i.e 40000
Profit /Loss | + | Other comprehensive income | = | Total comprehensive income |
$100000 | + | $ 40000 | = |
$ 140000 |
Net income | + | Foreign currency adjustment | = |
$ 140000 |
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