4.1.2 CICA 1530, Comprehensive Income

chrisboersmachrisboersma
in CIA.Accting

From the reading:

Equity is expanded to show not only retained earnings, but also accumulated other comprehensive income and accumulated comprehensive income (the latter equal to the sum of retained earnings and accumulated other comprehensive income).

I read this and seem to go into a loop: equity includes retained earning AND AOCI AND ACI, but the latter (AOCI AND ACI) include retained earning and AOCI. So do we need to include retained earning twice? Or is this just a round about way of saying "accumulated comprehensive income" = "retained earnings". Then the "but also" doesn't seem to make sense.

So are they saying (the latter equal to...)

accumulated other comprehensive income and accumulated comprehensive income
= sum of retained earnings and accumulated other comprehensive income

This seems like a strange way to say something because the AOCI's offset leaving us with retained earning = accumulated comprehensive income.

Or...(the latter equal to...)

accumulated comprehensive income
= sum of retained earnings and accumulated other comprehensive income

This is just confusing...

Furthermore, where is "accumulated comprehensive income" shown on the balance sheet.

Why is this not correct:

Equity is expanded to show not only retained earnings, but also accumulated other comprehensive income.

Comments

  • javidjavid

    You are right. That paragraph wasn't the very clear when I first read it too.

    Looking at some actual Balance Sheets may help here:
    1. Page 48 of http://media.corporate-ir.net/media_files/TOR/ctc.ca/InterimReportQ207.pdf
    2. Page 2 of http://www.endurancegold.com/i/pdf/q2_2007.pdf

    I would summarize as follows:
    1. Equity has various components such as Share Capital, Contributed Surplus (or additional paid-in capital), Retained Earnings and AOCI
    2. As seen in the second reference above, you can summarize "Retained Earnings (or Deficit in their case) + AOCI" as ACI. This is what was said in the brackets of the Educational Note.

    The "but also accumulated other comprehensive income and accumulated comprehensive income" makes it sound like these are two completely separate line items, which is not the case.

  • chrisboersmachrisboersma

    Thanks - glad to confirm it wasn't clear

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