Section 1: 30–40%1A3
Statement of Comprehensive Income
Exam Insight
Treasury stock trips up more candidates than almost any other balance sheet topic. Remember: treasury stock reduces equity - it is NOT an asset. The AICPA will give you a buyback and ask for total stockholders' equity - candidates who add treasury stock instead of subtracting it fail this every time. Also know the par value method vs. cost method for treasury stock recording.
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What AICPA Wants You to Know
- 1Define comprehensive income and explain how it relates to net income
- 2List the five OCI items tested on the FAR exam and know where each comes from
- 3Explain accumulated OCI (AOCI) and how it appears on the balance sheet
- 4Describe the two presentation options for comprehensive income
- 5Apply reclassification adjustments to avoid double-counting in comprehensive income