For the year ended December 31, 2007, Milan Company reported the following financial information: Gross profit from sales $600,000 Operating expenses 100,000 Unrealized loss from foreign currency translation 30,000 Dividends received from available-for-sale securities 15,000 Increase in minimum pension liability 45,000 Interest expense 25,000 Acquired treasury stock for $25,000 more than original book value 75,000 Unrealized gain from available-sale-securities 20,000 Ignoring taxes, calculate Milan’s net income and comprehensive income for 2007. Net income Comprehensive income A) $490,000 $2,000 B) $490,000 $435,000 C) $40,000 $44,000 D) $40,000 $43,000
Net looks like 490 I did 600 - 100 + 15 - 25 = 490
B) $490,000 $435,000 because NI is 490, and everything else is way too low to be CI
Nice work. Do you know Comprehensive?
B comp income = 435
daj224 Wrote: ------------------------------------------------------- > B > > > comp income = 435 fuc& i feel good right now, i will be up for days but i feel good, bring MORE questions please!
That was on the test I just took. I’m still not catching 100% how to understand comp income.
meazza Wrote: ------------------------------------------------------- > That was on the test I just took. > > I’m still not catching 100% how to understand comp > income. EASY: COMP INCOME = NET INCOME +/- THE ELEMENTS OF OCI OCI INCLUDES FOUR THINGS PENSION STUFF FOREGN CURRENCY TRANSL UNREALIZED GAINS/LOSS ON AFAS SECURITIES UNRELIZED GAINS/LOSS ON DERIVATIVE HEDGES
What test is this? this question is BLOODY HARD. i got 490 part of the NI. But comprehensive income… aahh let’s see -30 - 45 available for sale should make straight to equity tho i think I would pick A.
How is comp derived from net?
CI = NI + other comprehensive income i took B because unless there is a $300,000 loss somewhere in there everything else is much too low comprehensive income is net income + things that bypass the income statement and go to equity (e.g. unrealized gains/losses)
B) NI =490000 , CI= NI + other comp inc = 490000-55000=430000
what happens to repurchased stock ? It says its 25K above BV ? why didn’t you adjust for that in other compre income ? thanks
It is B I can’t figure out comp. Blasted FSA, this is suppose to be an easy review question.
Stock repurchases are financing activity !!!
Anything treasury related should not be included in calculating CI, that i remember…
Net income is equal to $490,000 ($600,000 gross profit – $100,000 operating expenses + $15,000 dividends received – $25,000 interest expense). Comprehensive income includes all transactions that affect stockholders’ equity except transactions with shareholders. Thus, comprehensive income is equal to $435,000 ($490,000 net income – $30,000 unrealized loss from foreign currency translation – $45,000 increase in minimum pension liability + $20,000 unrealized gain on available-for-sale securities). The treasury stock purchase is a transaction with shareholders and is not included in either comprehensive income or net income.
KJH - Then what happens to the equity portion of balance sheet when a repurchase is done at say premium to book value ? (this is not related to this question).
question: how will the following affect the balance sheet and income statement? Acquired treasury stock for $25,000 more than original book value 75,000
could there be an unrealized gain/loss that doesn’t affect anything that they could throw in there to confuse you? what things do you not mark to market? inventory?