AFM291 Chapter Notes - Chapter 13: Accounts Receivable, Retained Earnings, Income Statement
28 Jun 2018
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Notice the two entries required.
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Accumulated Other Comprehensive Income (AOCI)
3.
ASPE doesn’t use it tho cuz aspe is dumb
o
AOCI accumulates other comprehensive income (OCI) from all prior periods like how realized
profits and losses are accumulated in retained earnings and is part of the equity section of the
balance sheet
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IFRS uses reserves to refer to AOCI, but also other reserves like contributed surplus
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FVOCI bond goes from 25,000 to 27,000 in market value: $2,000 unrealized gain is booked
to OCI and then its closed into AOCI at year end when closing
o
OCI represents unrealized change in the fair market value of select assets including FVOCI
investments
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It is “parked” in AOCI
o
OCI usually does not go through net income and is not taxed
o
Recognizing amounts through OCI
Accumulating OCI in AOCI
Recognizing them in net income and retained earnings
Recycling is just the cycle of OCI
o
Recycling of OCI: the process of recognizing amounts through OCI accumulating that OCI in
AOCI (reserves), and later recognizing those amounts through net income and retained earnings
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OCI from investment in debt securities is recycled through net income and retained earnings
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Entity may reclassify AOCI directly to retained earnings
OCI from investments in equity securities is not
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Journal entry debiting AOCI and crediting retained earnings thus bypassing the income
statement
2,000 is recognized to OCI
o
2,000 from OCI is closed into AOCI
o
1,000 is recognized as net income when sold and 2,000 is recycled through AOCI and
recognized as net income as well
o
Ex. FVOCI bond goes from 25,000 to 27,000 and then next year is sold for 28,000
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Company needs to distinguish AOCI from FVOCI investments (debt) separately from amounts
arising from revaluation (equity)
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Summary
Summary of the accounting classification of different components and sub-components of
equity:
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AFM 391 Page 3
Document Summary
Aoci accumulates other comprehensive income (oci) from all prior periods like how realized profits and losses are accumulated in retained earnings and is part of the equity section of the balance sheet. Aspe doesn"t use it tho cuz aspe is dumb. Ifrs uses reserves to refer to aoci, but also other reserves like contributed surplus. Oci represents unrealized change in the fair market value of select assets including fvoci investments o. Fvoci bond goes from 25,000 to 27,000 in market value: ,000 unrealized gain is booked to oci and then its closed into aoci at year end when closing. Recycling of oci: the process of recognizing amounts through oci accumulating that oci in. Aoci (reserves), and later recognizing those amounts through net income and retained earnings o o o o. Oci usually does not go through net income and is not taxed. Recognizing them in net income and retained earnings.
