Question

In: Accounting

If a business has $100,000 in net income, $20,000 in advertising expenses, $10,000 in accounting fees,...

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?

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Expert Solution

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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