A review of the December 31,2006,financial statements of a corporation revealed that under the caption "Exceptional and infrequent losses," a total of $130,000 was reported.Further analysis revealed that the $130,000 in losses was comprised of the following items: (1) A loss of $25,000 incurred in the abandonment of equipment formerly used in the business.
(2) An unusual and infrequent occurrence,a loss of $37,500 was sustained as a result of damage to a warehouse by a falling meteorite.
(3) During 2001,several factories were shut down during a major strike by employees.Shutdown expenses totalled $60,000.
(4) Uncollectible accounts receivable of $7,500 were written off as uncollectible.
(5) Foreign exchange - translation gains: $10,000
(6) Decline in market value of Available-for-sale securities: $15,000
Ignoring income taxes,what amount would be shown as Other Comprehensive Income (Loss) on the statement of Comprehensive Income?
A)($5,000)
B)$10,000
C)$15,000
D)$130,000

Question

Quizplus · Accepted Answer

The correct answer is A because Other Comprehensive Income (Loss) includes items that are not included in net income, such as foreign exchange translation gains and losses, and unrealized gains and losses on available-for-sale securities. In this case, the foreign exchange translation gain of $10,000 and the decline in market value of available-for-sale securities of $15,000 would be included in Other Comprehensive Income (Loss), resulting in a total of ($5,000).

A Review of the December 31,2006,financial Statements of a Corporation