[Anonymous]

A company reported the following information for year 1:

Net Income 34,000

Owner contribution 9000

Deferred gain on an effective cash flow hedge 8000

Foreign Currency translation gain 2000

Prior service cost not recognized in net periodic pension cost 2000

What is the amount of other comprehensive income for year 1?

A. 5000

B. 14,000

C. 15,000

D. 43,000

Answer A. Other comprehensive income includes all of comprehensive income not included in net income. Both the deferred gain on effective cash flow hedge and the foreign currency translation gain would have a positive effect on other comprehensive income, comprehensive income for Year 1 equal to 5,000 (8,000 + 2,000 – 5,000).

---

Where did the 5,000 come from? The prior service cost according to the question is 2,000, not 5,000.

[Determined CPA]

I remember this question. There is an error in the question. The Prior service cost not recognized in net periodic pension cost should be $5,000.

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Anonymous]

Ah, that makes a lot of sense. I was sweating out unnecessarily then hehe.

[Determined CPA]

Good luck on the 31st!

A - 75
B - 78 God is good.
F - 77 Answered prayers.
R - 84! Done!!

Paperwork sent - waiting for license!!
Still on a cloud and in shock. Through God, all things will happen.

[Author]

Replies