You can download the solution to the following question for free. For further assistance in Accounting and Finance assignments please check our offerings in Accounting assignment solutions. Our subject-matter experts provide online assignment help to Accounting students from across the world and deliver plagiarism free solution with free Grammarly report with every solution.
(ExpertAssignmentHelp does not recommend anyone to use this sample as their own work.)
Due Date: Week 7 (15 April 2015)
PRACTICAL QUESTION:
On 1 July 2014 Kiama Ltd issues $2 million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective interest method.
Required:
Review your requirements with our FREE Assignment Understanding Brief and avoid last minute chaos.
We provide you services from PhD experts from well known universities across the globe.
No more plagiarism worries. We give you a FREE Grammarly report with every assignment.
Our experts work round the clock to provide you with solutions before the scheduled deadline.
The assignment primarily focuses on the importance of Other Comprehensive Income (OCI) in a financial statement. An initial background about OCI and the reason behind the emergence of OCI as an important part of a financial statement of a firm has been explained. Apart from that, the present requirements which are needed regarding the delineation of OCI in a financial statement along with the various changes that were considered to differentiate OCI with profit and loss statement have been discussed.
A reason as to why the researchers have found certain issues with respect to OCI in the revised conceptual framework of the IASB and the various problems that it may lead to having been explained in the following assignment. It also deals with certain shortcomings in the amendments which are made due to lack of clarity between the elements of a profit and loss statement and Other Comprehensive Statement.
The assignment also deals with the various international developments pertinent to Other Comprehensive Income and the different implications it would have on the Australian reporting entities. The different approaches that have been considered while dealing with OCI and profit and loss statement have been discussed in detail. Also, the various implications of these approaches on the various firms that provide financial statements to the final users have also been explained.
It also provides a small insight into the steps that would be taken and the appropriate timeline that would be needed in order to make further changes to this conceptual framework by IASB.
History
The importance of Comprehensive Income was known around the year 1980.It was then explained four years later in the year 1984.However, the concept was first put into practice in the year 1997 when the FASB issued FASB130 , the method on how to report the comprehensive income in the financial statements of a firm. In the year 1998, the group known as G4+1 which involved the standard-setters from Australia, Canada, US, New Zealand and Great Britain along with the IASB representatives had initiated the proposal for a financial statement that delineates the performance of the company with respect to different activities. This proposal formed the basis of the statement pertinent to the Other Comprehensive Income. (Mihaela DUMITRANA, 2010)
Rationale
Initially, the profits of the company which was made through non-operational activities were directly allowed to go into the shareholder’s equity. The Other Comprehensive Income was then introduced to constitute the income through these activities because the impact of this income was huge pertinent to the financial statements of a particular firm.
The Other Comprehensive income consists of the income of the firm made through the various investments that a particular firm possesses. It helps to get a good measure of the income that the firm makes through its various investments which provide a broader insight into the performance of the company as well as the managers.