In example 13 / Reading 45 - Residual income Valuation: In solution 2B: The adjustment to NI should be NI-OCI. In exhibit 12, year 2: OCI reduces Sharholders Equity directly. In other words, the OCI loss does not hit the Income statement or NI but adjusts the B/S directly. So, to adjust the earnings, the OCI loss should hit the NI. In other words, the adjustment should be NI-OCI and not NI+OCI. Practice problem 12 elaborates on this logic. Does anyone see this? Thanks
You are correct. Actual calculation is based on NI-OCI. Probably writer meant to say NI + (+/-OCI)
Mitchells, Thanks for confirming.