CFA Practice Question

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CFA Practice Question

Which item is included in comprehensive income but not in net income?

I. Unrealized gains/losses from held-to-maturity securities
II. Unrealized gains/losses from trading securities
III. Unrealized gains/losses from available-for-sale securities
Correct Answer: III only

User Contributed Comments 11

User Comment
poomie83 Could someone provide an explanation
sjurrens Just a definition. It's how the firm decides to define the security. Check accounting notes for types of securities (those listed in the question are the 3)
charomano Unrealized gains/losses from HTM are not reported in neither Comprehensive Income nor Net Income
sogah what about ii
NIKKIZ Held-to-maturity; - premiums/discounts are amortized and amortized amount posted into the income statement. Available-for-sale - gains/losses posted to Other Comprehensive Income. Held-For-Trading; gains/losses marked to market and posted in the income statement. Note that for realized gains (from the actual sale of an investment) the gains/losses become realized for any investment and are always included in the income statement.
johntan1979 Thanks NIKKIZ!
2014 Thanks NIKKIZ
johntan1979 Unrealized gains/losses for HTM are NOT REPORTED! Please be aware of this.
robbiecow HTM: Transaction is on the BS (reported @ amtz cost)
AFS: Fair value (gains & losses to Other Comprehensive Inc.)
TS: Fair value (gains & losses to Oper. Income)

Think of what the intent of each one is.
jfermin315 robbie great thanks!! Flash cards are clutch and you just added to my stack
khalifa92 you have to understand the difference between those three to get the whole picture
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