{"id":3767,"date":"2019-10-08T13:33:00","date_gmt":"2019-10-08T13:33:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=3767"},"modified":"2026-03-10T19:54:39","modified_gmt":"2026-03-10T19:54:39","slug":"other-comprehensive-income-calculation","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/financial-reporting-and-analysis\/other-comprehensive-income-calculation\/","title":{"rendered":"Other Comprehensive Income"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"Which item is least likely to be treated as other comprehensive income?\",\n    \"text\": \"Which of the following is least likely to be treated as 'other comprehensive income'?\\n\\nA. Foreign currency translation adjustments.\\nB. Realized holding gains and losses on available-for-sale securities.\\nC. Unrealized gains or losses on derivatives contracts accounted for as hedges.\",\n    \"answerCount\": 1,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The correct answer is B. Realized holding gains and losses on available-for-sale securities are reported in the income statement and included in net income. In contrast, unrealized gains or losses on these securities, foreign currency translation adjustments, and certain hedge-related derivative gains or losses are typically reported in other comprehensive income.\"\n    }\n  }\n}\n<\/script>\n\n\n<p><iframe loading=\"lazy\" src=\"\/\/www.youtube.com\/embed\/hNscz8Hx_Jg\" width=\"611\" height=\"343\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p>Based on accounting conventions, certain items of revenue and expense are excluded from the net income calculation. These excluded items are referred to as \u2018other comprehensive income.\u2019<\/p>\n<p>Under both IFRS and US GAAP, there are four types of items that are treated as \u2018other comprehensive income:<\/p>\n<ul>\n<li><strong>foreign currency translation adjustments<\/strong>: these result from the translation of foreign subsidiaries\u2019 balance sheet assets and liabilities at current exchange rates when consolidating the foreign subsidiaries\u2019 financial statements;<\/li>\n<li><strong>unrealized gains or losses on derivatives contracts which are accounted for as hedges<\/strong>: these are treated as \u2018other comprehensive income\u2019 and therefore bypass the income statement;<\/li>\n<li><strong>unrealized holding gains and losses on available-for-sale securities<\/strong>; and<\/li>\n<li><strong>certain costs related to a company\u2019s defined benefit post-retirement plans are not recognized in the current reporting period<\/strong>.<\/li>\n<\/ul>\n<p>Under IFRS, \u2018other comprehensive income\u2019 also includes certain changes in the value of long-lived assets that are measured using the revaluation model.<\/p>\n<blockquote>\n<h3><strong>Question<\/strong><\/h3>\n<p>Which of the following is <em>least likely<\/em> an item that is treated as \u2018other comprehensive income\u2019?<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">Foreign currency translation adjustments.<\/li>\n<li data-tadv-p=\"keep\">Realized holding gains and losses on available-for-sale securities.<\/li>\n<li data-tadv-p=\"keep\">Unrealized gains or losses on derivatives contracts which are accounted for as hedges.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is <strong>B<\/strong>.<\/p>\n<p>Realized holding gains and losses on available-for-sale securities are not treated as \u2018other comprehensive income.\u2019 Realized gains and losses are reported in the income statement and are reflected in net income. If instead the holding gains and losses on the available-for-sale securities are unrealized, then they would bypass the income statement and go directly to shareholders\u2019 equity through other comprehensive income.<\/p>\n<p>The other statements (option A and C) are both examples of items that are treated as \u2018other comprehensive income.\u2019<\/p>\n<\/blockquote>","protected":false},"excerpt":{"rendered":"<p>Based on accounting conventions, certain items of revenue and expense are excluded from the net income calculation. These excluded items are referred to as \u2018other comprehensive income.\u2019 Under both IFRS and US GAAP, there are four types of items that&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-3767","post","type-post","status-publish","format-standard","hentry","category-financial-reporting-and-analysis","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Other Comprehensive Income | CFA Level 1 - AnalystPrep<\/title>\n<meta name=\"description\" content=\"Learn the components of other comprehensive income under IFRS and US GAAP, including unrealized gains and losses.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/financial-reporting-and-analysis\/other-comprehensive-income-calculation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Other Comprehensive Income | CFA Level 1 - 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