[thechapman]

I am not currently studying for FAR, but I am in a graduate accounting class and thought you guys would be perfect to ask this question. Can anyone help me out a little with other comprehensive income? The way I think about it, OCI is to AOCI as net income is to retained earnings. Is this right in a very basic, dumbed-down sense? The context of my question is in terms of available-for-sale securities.

According to a book we are using for my class, changes in fair value of available-for-sale securities go to AOCI and are then transferred to the income statement when the security is sold. However, I thought that these gains (losses) had to run through OCI first. If anyone could shed a little light on what I am missing it would be greatly appreciated. Thanks for any help!

Passed - 2014

[stoleway]

Hey lets try this out.

OCI is the reason why comprehensive income portion of the FS statement exist.

Total OCI for the year are bundled together and transferred to the equity section of the balance sheet as AOCI.

Net income is also credited or transfered to RE at year end, which will also reflect at the equity section of the balance sheet

Unrealised holding loss/gain on AFS is debited/credited to OCI, but this must be removed from the balance sheet once the security is sold, at this time you have to recognise disposal gain or loss in your income statement.

Think of AFS the same way accumulated depreciation is removed from the ballance sheet when an equipment is sold.

Hope this helps.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[stoleway]

Hey lets try this out.

OCI is the reason why comprehensive income portion of the FS statement exist.

Total OCI for the year are bundled together and transferred to the equity section of the balance sheet as AOCI.

Net income is also credited or transfered to RE at year end, which will also reflect at the equity section of the balance sheet

Unrealised holding loss/gain on AFS is debited/credited to OCI, but this must be removed from the balance sheet once the security is sold, at this time you have to recognise disposal gain or loss in your income statement.

Think of AFS the same way accumulated depreciation is removed from the ballance sheet when an equipment is sold.

Hope this helps.

REG -63│ 84!!
BEC- 59│70│ 71 │78!
AUD- 75!
FAR- 87!

Mass-CPA

[thechapman]

That helps quite a bit. Thank you for the response.

Passed - 2014

[thechapman]

That helps quite a bit. Thank you for the response.

Passed - 2014

[Author]

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