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Concept of P/L and OCI - Coggle Diagram

- - - - FVTOCI
        
        gains and losses are recognised in OCI and accumulated in OCE.
      - FVTPL
        
        gains and losses are recognised in SOPL and become part of RE.
  - - - provide the primary source of information about the entity’s financial performance for the reporting period.
      - should recognise all income and expense
      - to allow the SOPL to provide more relevant information or provide a more faithful representation of an entity’s performance.
    - - Board may also provide exceptional circumstances where income or expenses arising from the change in the carrying amount of an asset or liability should be included in OCI
- - - - a standard that requires gains and losses to be reclassified from equity to SOPL (form part of the disposal) as a reclassification adjustment on the disposal of the subs
      - When a group has an overseas subsidiary a group exchange difference will arise on the re-translation of the subsidiary’s goodwill and net assets.
    - - prohibits gains and losses to be reclassified from equity to SOPL as a reclassification adjustment
      - The previously recognised gain of $2m is not recycled/reclassified back to SOPL as part of the gain on disposal.
      - However the $2m balance in the revaluation surplus is now redundant as the asset has been sold and the profit is realised.
      - Accordingly, there will be a transfer in the Statement of Changes in Equity, from the OCE of $2m into RE.
      - are only included once in total comprehensive income
    - - prohibits the recycling of the gains and losses on FVTOCI investments to SOPL on disposal
      - are only included once in total comprehensive income
- - - - A revaluation surplus on a financial asset classified as FVTOCI
        
        The asset is accounted for at fair value on the statement of financial position but effectively at cost in SOPL
        
        As such, by recognising the revaluation surplus in OCI, the OCI is acting as a bridge between the statement of financial position and the SOPL
        
        On disposal reclassification ensures that the amount recognised in SOPL will be consistent with the amounts that would be recognised in SOPL if the financial asset had been measured at amortised cost.
    - - effective gain or loss on a cash flow hedge of a future transaction
        
        it relates to a transaction in a future accounting period so needs to be carried forward so that it can be matched in the SOPL of a future accounting period
        
        Only by recognising the effective gain or loss in OCI and allowing it to be reclassified from equity to SOPL can users to see the results of the hedging relationship.
  - - - those that arise on the remeasurement of defined benefit pension funds and revaluation surpluses on PPE.