From your readings in the Special Module on foreign currency translation adjustments, summarize U.S. GAAP and...

From your readings in the Special Module on foreign currency translation adjustments, summarize U.S. GAAP and IFRS differences on this topic and from the example in that module of one item that goes in Accumulated Other Comprehensive Income can you find such treatment in a company's equity section, either a US parent company or a foreign parent company?

I know the differences between GAAP and IFRS, Can anybody give an example that goes in Accumulated other comprehensive income? and find such treatment in a company's equity section?

Solutions

Expert Solution

What is Accumulated other comprehensive income (OCI)?

Accumulated other comprehensive income (OCI) is a line item in the shareholders' equity section of the balance sheet that includes the income that is not reported in the income statement.

Why OCI is excluded from net income?

It is excluded from net income, simply because the transactions are of unusual in nature and are not generated through a company's normal business operations.

In addition to investment and pension plan gains and losses, OCI includes. By segregating OCI transactions from operating income, a financial statement reader can have better comparability.

Example: Unrealized gains and losses on investments

Apple is purchased at $500 per share and the fair market value is $550 per share, then the unrealized gain is $50 per share. Companies can designate investments as available for sale, held to maturity or trading securities. Unrealized gains and losses are reported in OCI for some of these securities, so the financial statement reader is aware of the potential realized gain or loss in the income statement down the road.

ekkarill92 answered 9 months ago

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