ExpertMedium1 markMultiple Choice
CPA · Question 09 · Area I: Financial Reporting
Which of the following items is EXCLUDED from Other Comprehensive Income (OCI)?
Which of the following items is EXCLUDED from Other Comprehensive Income (OCI)?
Answer options:
A.
Pension prior service cost adjustments
B.
Unrealized gains on available-for-sale debt securities
C.
Foreign currency translation adjustments
D.
Unrealized gains on equity securities
How to approach this question
Recall the mnemonic 'PUFI' for OCI: Pension adjustments, Unrealized G/L on AFS debt, Foreign currency items, Instrument-specific credit risk. Equity securities go to Net Income.
Full Answer
D.Unrealized gains on equity securities✓ Correct
D
Unrealized gains/losses on equity securities are recognized in Net Income, not OCI (unless the equity method or consolidation applies, but for standard fair value holdings, it's NI). The other items are standard OCI components.
Common mistakes
Confusing AFS debt rules with equity rules.
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