Other Comprehensive Income
Response to the following problem:
In this chapter you learned that certain transactions that changed a company's net assets were not reflected on the income statement but instead were reflected on the statement of stockholders' equity under the heading of accumulated other comprehensive income.
Prepare a two-page memo summarizing the following points:
1. Why aren't all items included under accumulated other comprehensive income simply disclosed on the income statement? What is it about these transactions that keep their effects off the income statement?
2. In your opinion, do you think there should be a separate accumulated other comprehensive income statement or is disclosing the amount in the statement of stockholders' equity sufficient to get investor's attention?