Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Basic Question 0 of 6
Which statement(s) is (are) true?
II. Comprehensive income can be reported in the income statement or shareholder's equity.
III. Losses or gains on foreign currency transactions is an example of comprehensive income.
IV. For most firms, comprehensive income is more volatile than net income, exceeding net income in some years but falling below net income in others.
V. Net income is a component of comprehensive income.
I. Comprehensive income includes all changes in equity during a period.
II. Comprehensive income can be reported in the income statement or shareholder's equity.
III. Losses or gains on foreign currency transactions is an example of comprehensive income.
IV. For most firms, comprehensive income is more volatile than net income, exceeding net income in some years but falling below net income in others.
V. Net income is a component of comprehensive income.
User Contributed Comments 6
| User | Comment |
|---|---|
| CFAlevel | III. Gains and looses from FX transactions are NOT a part of OCI as they are reporting in the Income Statement. Only translation adjustments are. Big difference. |
| troyes | 1st is wrong since comprehensive income is part of the shareholder's equity. It is a component of equity, so to include all of equity you're still missing "investments by owners and distributions to owners" (quoted from the book) |
| aravinda | Comment on CFALevel's... It looks like all the translation adjustments gains/losses (all- current method) would get accumulated in the equity section under the other comprehensive income... but incase of the Temporal method, unrealized gains/losses are recognized in the Income statement... I believe. |
| rhardin | With Current method, it's called translation (as in the above question.) With the temporal method, it's called remeasurement, which goes to the income statement. The above III choice is referencing translation only. |
| NIKKIZ | No - choice III refers to 'losses or gains on foreign currency transactions' not 'translations'. Transactions are realized (because it occurred) and should go through the Income Statement. FX translations are not transactions and can go through Other Comprehensive Income, depending on whether the Temporal or Current method is being used. I think that III is false. |
| johntan1979 | Gains and losses resulting from translating the financial statements of foreign subsidiaries (from foreign currency to the presentation currency) [IAS 21 / "FAS 52" - "Foreign Currency Translation"] |
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
describe, calculate, and interpret comprehensive income;
describe other comprehensive income and identify major types of items included in it.
CFA® 2024 Level I Curriculum, Volume 3, Module 18.