Comprehensive Income
Assume that you are the accountant for Ellis Corporation, which has issued its 2014 annual report. You have received an inquiry from a stockholder who has questions about several items in the annual report, including why Ellis has not shown certain transactions on the income statement. In particular, Ellis's 2014 balance sheet revealed two accounts in Stockholders' Equity (Unrealized Gain/Loss-Available-for-Sale Securities and Loss on Foreign Currency Translation Adjustments) for which the dollar amounts involved were not reported on the income statement.
Required
Draft a written response to the stockholder's inquiry that explains the nature of the two accounts and the reason the amounts involved were not recorded on the 2014 income statement. Do you think that the concept of comprehensive income would be useful to explain the impact of all events for Ellis Corporation? Why or why not?