F1 M7 Statement of Comprehensive Income
Comprehensive Income
Nonowner transactions
Change in equity (net assets)
Includes all equity expect
Investments/Distribution s from owners
Net Income
Income from continuting operations
Discontinued operations
No Extraordinary items as it goes to RE
Net Income + OCI = Comprehensive Income
OCI (PUFER)
Goes to equity (Accumulated OCI)
Includes REGL included in Comprehensive income but excluded from Net income under GAAP and/or IFRS
Must classify the item nature
Pension Adjustments
Unrealized Gains and Losses (AFS Debt Securities only)
Foreign Currency Items
Effective Portion of Cash Flow Hedges
Revaluation Surplus (IFRS only)
Reclassification adjustments
To avoid double accounting, for every accounting period, we move OCI items from accumulated OCI to the I/S.
Accumulated OCI
Part of equity that includes current period and all prior period's OCI
OCI is closed into this account just like Net Income into R/E
Pension Adjustments
GAAP vs IFRS
GAAP
Changes in fund status must be recognized in year occurred.
All gain or losses, prior service costs, transition assets or obligations go to OCI and can be recognized as net periodic benefit costs later
IFRS
Certain actuarial gain and losses may be included in OCI, but it can't be reclassified into net income later
Actuarial gains and losses
Gains is when employer pays less than expected
Losses when employer pays more than expected
Unrealized Gains and Losses (AFS Debt)
Part of OCI until sold
Reclassifying "Held to Maturity" into AFS
Later changes in FV of AFS debt
Foreign Currency Items
Stays in OCI until sale or liquidation of investment in foreign entity
Effective Portion of Cash Flow Hedges
Until cash flows related to hedged items are realized
Revaluation of Surplus (IFRS only)
IFRS only
Gains from asset's revaluations
No reclassified into net income later, but directly to R/E when asset is used or derecognized
Comprehensive Income are nonowner equity
which is all equity but investment and distributions from owners. It is made up of Net Income and Other Comprehensive Income.
Net Income includes continuing operations and discontinuing operations, just no extraordinary items as that goes to R/E.
Other Comprehensive Income are REGL excluded from Net Income and goes to Accumulated OCI on the B/S.
Other OCI must be classified by the item's nature which is remembered by PUFER.
Pension adjustment, Unrealized GL on AFS Debt, Foreign Currency Items, Effective Portion of Cash Flow Hedges, Revaluation Surplus. Note Revaluation Surplus is only for IFRS)
To avoid double accounting OCI is closed into Accumulated OCI on the B/S at the end of every period just like how NI gets closed into R/E.
Pension adjustments are changes to the pension status due to gains or losses, prior service costs, transition assets or obligations.
Under GAAP, pension adjustments can later be recognized as net periodic benefit costs.
However, under IFRS, once included in OCI it can't be reclassified into net income later.
Unrealized Gain and Losses on AFS Debt securities are part of OCI until sold. It includes current reclassification and later changes in FV of the debt.
Foreign Currency Translation Items stay in OCI until foreign entity is sold or liquidated.
Effective Portion of Cash Flow Hedges stay in OCI until hedges are realized.
Revaluation of Surplus or Gain is only IFRS. When asset is used or recognized, it is not reclassified into net income, but directly skips it and goes to R/E.
F/S Reporting of Comprehensive Income
Same as other F/S, but not by share basis
Does not apply
NFP Entities
Any company with no OCI
Presentation
Single statement approach
Two-statement approach
Income statement then a separate statement of comprehensive income that begins with net income
GAAP and IFRS have same rule
Just the Statement of Comprehensive Income
Displays each item individually net of tax, then sum them into OCI, then sum it with Net income to get Comprehensive Income
Displays just like single statement, just starts with NI include of the I/S
Comprehensive Income is presented with a single or two statement approach. Single statement has the I/S on top, Two statement has only Net Income on top and is separate from the I/S.
Items are displayed individually net of tax, then summed together into OCI, afterwards it is summed with Net Income.
NFP and companies with no OCI do not need to present a Statement of OCI.
GAAP and IFRS are aligned.
Other Reporting Issues
OCI Income Taxes
It can be reported
Allocated taxes to each item of OCI must be
Disclosed in the statement face or
in Footnotes
Net of tax
or Before tax with a separate total tax line for all OCI taxes either in the face of the I/S or in the notes
Interim period reporting
Total for comprehensive income shall be reported, whole statement not required
Required Disclosures
Tax effects of each OCI item
Changes in AOCI balances of each OCI item
Total AOCI must be on the B/S as an equity item
Reclassification adjustments of prior year OCI items are displayed in NI of current year
Need to disclosure changes in AOCI balance
Must separately disclose the reclassification adjustment and current period OCI
Part of Notes: Changes in AOCI by Components
Beginning Balance,
OCI before reclassifcation (Current year amount),
Less Amounts reclassified from AOCI
=Net current period OCI
Beginning Balance + Net current period OCI = Ending Balance
Some reporting issues include disclosures either in the face or in the footnotes.
Interim periods must disclose that total comprehensive income. Taxes can be reported net of tax or before tax as long as the tax effects of each OCI items are disclosed.
In addition, the changes of AOCI balance of each OCI must be disclosed. The AOCI disclosure must show the reclassification adjustment of current period OCI to not double count something.
AOCI Beg Bal + Net current Period OCI = AOCI End balance.
The total AOCI must be reported on the B/S as an equity item.
Remeasurement and Transactions are included in Net Income, not OCI