Hi, I some problems with this excercise
An analyst gathered the following information about a company that follows U.S. GAAP for a given year: Beginning shareholders’ equity $1,350,000 Net income $250,000 Dividends declared $75,000 Dividends paid $85,000 Ending shareholders’ equity $1,575,000 The company’s comprehensive income for the year is closest to:
A. $50,000.
B. $300,000.
C. $60,000.
Comprehensive income is the change in shareholders equity right, so 1575000 - 1350000 = 225000 but there is no answer, I’m confused about this question
Comprehensive income is all transactions affecting shareholders equity with the exclusion of transactions with equity holders. Comprehensive income includes both net income and OCI.
To solve this problem look at how equity changed given the facts about net income and dividends declared (because even though dividends declared don’t impact comprehensive income they do impact equity).
Change in shareholders equity = 1575000-1350000= 225000
Comprehnsive income - dividends must equal change in SE (as there are no other owner transactions)
So replace comprehnsive income with X - 75000 = 225000