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On January 1, 2014, Tri-State Industries had cash and common stock of $180,000. At that date...

On January 1, 2014, Tri-State Industries had cash and common stock of $180,000. At that date the company had no other asset, liability or equity balances. On January 2, 2014, it purchased $160,000 of equity securities for cash that it classified as available-for-sale. It received cash dividends of $9,000 during the year on these securities. In addition, it had an unrealized holding gain on these securities of $24,000 net of tax. Based on this information, what is the amount of comprehensive income in 2014?

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Answer #1

Other comprehensive income contains all changes that are not permitted to be included in profit or loss. It is particularly valuable for understanding on going changes in the fair value of a company's assets. Items that you should insert in other comprehensive income include:

  • Available-for-sale securities fair value changes that were previously written down as impaired

  • Available-for-sale securities unrealized gains and losses

  • Cash flow hedge derivative instrument gains and losses

Hence Ans is 9000+4000 = 13000 comprehensive income.

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