Comprehensive income can be disclosed in various formats. Which of the following is an acceptable format for disclosing comprehensive income?I. At the bottom of the income statement, continue from net income and add other comprehensive income to arrive at comprehensive income for the year.II. In a separate statement, start with net income and add other comprehensive income to arrive at comprehensive income for the year.III. In the statement of stockholders’ equity, net income is adjusted for other comprehensive income to arrive at comprehensive income for the year.IV. After retained earnings in the stockholders’ equity section of the statement of financial position, start with net income and add other comprehensive income to arrive at comprehensive income for the year.

Answered: Comprehensive income can be disclosed…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 2MC: A prior period adjustment should be reflected, net of applicable income taxes, in the financial...

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Comprehensive income can be disclosed in various formats. Which of the following is an acceptable format for disclosing comprehensive income?

I.		At the bottom of the income statement, continue from net income and add other comprehensive income to arrive at comprehensive income for the year.
II.		In a separate statement, start with net income and add other comprehensive income to arrive at comprehensive income for the year.
III.		In the statement of stockholders’ equity, net income is adjusted for other comprehensive income to arrive at comprehensive income for the year.
IV.		After retained earnings in the stockholders’ equity section of the statement of financial position, start with net income and add other comprehensive income to arrive at comprehensive income for the year.

Expert Solution

Step 1

Comprehensive income:

The sum of regular and other comprehensive income is referred to as comprehensive income. The comprehensive income provides a more clear picture regarding the company's earnings and revenues.

Unrealized gains or losses from the following listed below are included in other comprehensive income:

Derivative financial instruments
Cash flow hedges
Foreign currency transactions
Debt securities

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