Section 1: 30–40%1A3
Statement of Comprehensive Income
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.
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