CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

A company reported net income of $400,000 for the year. At the end of the year, the company had an unrealized gain of $50,000 on its available-for-sale securities, an unrealized gain of $40,000 on held-to-maturity securities, and an unrealized loss of $100,000 on its portfolio of held-for-trading securities. The company's comprehensive income (in $) for the year is closest to ______.
A. 390,000
B. 420,000
C. 450,000
Explanation: Comprehensive Income = Net Income + Other Comprehensive Income = NI + OCI

Other Comprehensive Income will include unrealized gains or losses on available-for-sale securities. Net income includes unrealized gains or losses in trading securities, while securities classified as held to maturity are maintained at historical cost and therefore the unrealized gains won't impact comprehensive income.

OCI = $50,000; Comprehensive Income = NI + OCI = $400,000 + $50,000=$450,000

User Contributed Comments 3

User Comment
Inaganti6 great question
clemance Held-for-trading goes into NI, available for sale goes into OCI. Then shouldn't the comprehensive income be $400K+$50k-$100k=$350k

could someone please explain?
xe077 Clemance 100k is already inside 400k
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