Question

Companies are required to transfer “other comprehensive income” each period to shareholders’ equity. The FASB Accounting Standards Codification^® represents the single source of authoritative U.S. generally accepted accounting principles. Obtain the relevant authoritative literature on reporting other comprehensive income in shareholders’ equity using the FASB Accounting Standards Codification^® at the FASB website (www.fasb.org).

Required:
1. What is the specific nine-digit Codification citation (XXX-XX-XX-XX) that describes the guidelines for reporting that component of shareholders’ equity?

2. What is the specific nine-digit Codification citation (XXX-XX-XX-XX) that describes the guidelines for presenting accumulated other comprehensive income on the statement of shareholders’ equity?

Answer 1

Financial capital is applied to both currently reported ent income and comprehensive income. SFAC 6

The statement of shareholders’ equity reports the transactions that cause changes in its shareholders’ equity account balances. It shows the beginning and ending balances in primary shareholders’ equity accounts and any changes that occur during the years reported. Typical reasons for changes are the sale of additional shares of stock, the acquisition of treasury stock, net income, and the declaration of dividends.  

The measurement objective is that the transaction should be recorded at fair value. This might be the fair value of the shares or of the noncash assets or services received, whichever evidence of fair value seems more clearly evident. This is consistent with the general practice of recording any noncash transaction at market value.