Question

On January 1, 2025, Oriole Inc. had cash and common stock of $62,190. At that date, the company had no other asset, liability, or stockholders' equity balances. On January 2, 2025, it purchased for cash $24,130 of debt securities that it classified as available-forsale. It received interest of $4,860 during the year on these securities. In addition, it has an unrealized holding gain on these securities of $5,170 net of tax. Determine the following amounts for 2025: (a) net income, (b) comprehensive income, (c) other comprehensive income, and (d) accumulated other comprehensive income (end of 2025).

(a) Net income $ ___
(b) Comprehensive income $ ___
(c) Other comprehensive income $ ___
(d) Accumulated other comprehensive income $ ___

Answer 1

Oriole Inc. had a net income of $10,030 in 2025. The comprehensive income for the year was $15,200, with $5,170 being the other comprehensive income. The accumulated other comprehensive income at the end of 2025 was $5,170.

Step-by-step explanation:

To determine the amounts for 2025, we need to analyze the transactions of Oriole Inc. throughout the year:

1. On January 2, 2025, Oriole Inc. purchased $24,130 of debt securities classified as available-for-sale.
2. The company received $4,860 of interest during the year on these securities.
3. It also had an unrealized holding gain on these securities of $5,170 net of tax.

(a) Net income: The net income can be calculated by subtracting the interest earned from the debt securities ($4,860) from the total income earned (interest + unrealized holding gain) ($4,860 + $5,170 = $10,030).

(b) Comprehensive income: The comprehensive income is the sum of net income and other comprehensive income. In this case, it is $10,030 + $5,170 = $15,200.

(c) Other comprehensive income: The other comprehensive income is the unrealized holding gain on the debt securities ($5,170).

(d) Accumulated other comprehensive income (end of 2025): Since it is the first year, the accumulated other comprehensive income at the end of 2025 is equal to the other comprehensive income for the year ($5,170).