Question

Gains and lasses identified as other comprehensive income have the same status as traditional gains and losses under • the one statement approach. o both the one statement and two statement approaches. • the two statement approach. • neither the one statement or two statement approaches.

Answer 1

Gains and losses reported as other comprehensive income have the same status in both the one-statement and two-statement approaches; they bypass the net income calculation and are reported directly in equity, affecting total comprehensive income and shareholders' equity.

Step-by-step explanation:

The question relates to the presentation of gains and losses that are classified as other comprehensive income (OCI) in financial statements. Under both the one-statement approach and the two-statement approach, these gains and losses have the same status as traditional gains and losses. The OCI items are reported separately from net income on the income statement in the one-statement approach but appear in a separate statement of comprehensive income in the two-statement approach. However, regardless of the presentation method, these items bypass the typical net income calculation and are reported in equity through accumulated other comprehensive income, a component of shareholders' equity. Therefore, they do not affect the current period's net income but do impact the total comprehensive income and the equity of the company.