Your client, Jeffrey Smith, President and CEO of Malico Corporation of, took accounting a number of years ago and was unaware of comprehensive income reporting. He is not convinced that any accounting standards exist for comprehensive income.
Write a formal business letter to your client in good form. Provide the following information to Mr. Smith:
a. What authoritative literature addresses comprehensive income? When was it issued?
b. Provide the definition of comprehensive income.
c. Define classifications within net income; give examples
d. Define classifications within other comprehensive income; give examples.
e. Explain the difference between the end of year treatment of net income and other comprehensive income to your client.
f. How should the company present other comprehensive income and accumulated other comprehensive income in its financial statements?
G. What are reclassification adjustments? Give examples.