I understand that some accounts such foreign currency gain/loss, adjustments to pension liability, unrealized gains from AVS securities and cash flow hedging derivatives go under OCI (other comp. income), which affects net revenue. OCI is also reflected under Owner’s equity on the BS. However, what accounts under Assets or Liabilities balance these fluctuations? I did check cash flow statement for Walmart. But, couldn’t find above accounts. Hence, I am guessing these must be getting balanced by Liabilities. Can someone please help me?
From my understanding gathered till date, for items such as Available-for-sales securities, the effect of gain/loss on disposal reported under OCI (which in term an account under Owner’s Equity ) should be balanced by a corresponding effect for a change in accounts under Asset.
If you do not mind, can I add in 1 more question? Thanks.
I understand from Schweser notes that:
Under IFRS , other comprehensive income (hereafter " OC I") can be (i) reported together with income statement and presented as a full statement of comprehensive income (hereafter " CI") OR (ii) a separated statement with Net Income as the 1st line item.
Under U.S. GAAP , OCI can similarly be (i) presented as a separated statement OR (ii) reported together under the Statement of Owners’ Equity.
Question : Why does OCI reappear again under Statement of Owners’s Equity when there is already an accompanying seperated Statement of CI; and in which case is the company following IFRS or U.S. GAAP?
What accounts balance those OCI entries depend on the nature of the entry:
Foreign currency gains/losses (under the current rate method): the OCI entry balances a number of accounts which have been translated using different currency exchange rates; it’s complicated (but it’s a Level II topic; you needn’t worry about it now)
Adjustments to pension liabilities: the pension liability account will offset the OCI entry (which is, if memory serve, unamortized prior year adjustments; unamortized means that they haven’t gone through the income statment yet as part of pension expense)
Unrealized gains/losses on AVS securities: the offset will be a change in the carrying value (fair market value) of the AVS security: an asset
Effective portion of a cash flow hedge: the offset is a change in the fair market value of the derivative, which might be an asset or a liability, depending on its fair market value