The following is from the 2018 annual report of Kaufman Chemicals, Inc.: Statements of Comprehensive Income Years Ended December 31 2018 2017 2016 Net income $856 $766 $594 Other comprehensive income: Change in net unrealized gains on investments, net of tax of $22, ($14), and $15 in 2018, 2017, and 2016, respectively 34 (21) 23 Other (2) $888 (1) $744 Total comprehensive income $618 Kaufman reports accumulated other comprehensive income in its balance sheet as a component of shareholders equity as follows: (S in millions) 2018 2017 Shareholders' equity: Common stock 355 355 Additional paid-in capital Retained earnings Accumulated other comprehensive income 8,567 8,567 5,988 6,544 107 75 Total shareholders' equity $15,573 $14,985 Required: 1. What is comprehensive income and how does it differ from net income? 2. How is comprehensive income reported in a balance sheet? 3. Why is Kaufman's 2018 balance sheet amount different from the 2018 amount reported in the disclosure note? Explain. 4. From the information provided, determine how Kaufman calculated the $107 million accumulated other comprehensive income in 2018.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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E 18-1
Comprehensive
The following is from the 2018 annual report of Kaufman Chemicals, Inc.:
Statements of Comprehensive Income
Years Ended December 31
income
• LO18-2
2018
2017
2016
Net income
$856
$766
$594
Other comprehensive income:
Change in net unrealized gains on investments,
net of tax of $22, ($14), and $15 in 2018, 2017,
and 2016, respectively
34
(21)
23
Other
(2)
$888
(1)
$744
$618
Total comprehensive income
Kaufman reports accumulated other comprehensive income in its balance sheet as a component of shareholders
equity as follows:
($ in millions)
2018
2017
Shareholders' equity:
Common stock
355
355
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income
8,567
6,544
8,567
5,988
107
75
Total shareholders'equity
$15,573
$14,985
Required:
1. What is comprehensive income and how does it differ from net income?
2. How is comprehensive income reported in a balance sheet?
3. Why is Kaufman's 2018 balance sheet amount different from the 2018 amount reported in the disclosure
note? Explain.
4. From the information provided, determine how Kaufman calculated the $107 million accumulated other
comprehensive income in 2018.
Transcribed Image Text:E 18-1 Comprehensive The following is from the 2018 annual report of Kaufman Chemicals, Inc.: Statements of Comprehensive Income Years Ended December 31 income • LO18-2 2018 2017 2016 Net income $856 $766 $594 Other comprehensive income: Change in net unrealized gains on investments, net of tax of $22, ($14), and $15 in 2018, 2017, and 2016, respectively 34 (21) 23 Other (2) $888 (1) $744 $618 Total comprehensive income Kaufman reports accumulated other comprehensive income in its balance sheet as a component of shareholders equity as follows: ($ in millions) 2018 2017 Shareholders' equity: Common stock 355 355 Additional paid-in capital Retained earnings Accumulated other comprehensive income 8,567 6,544 8,567 5,988 107 75 Total shareholders'equity $15,573 $14,985 Required: 1. What is comprehensive income and how does it differ from net income? 2. How is comprehensive income reported in a balance sheet? 3. Why is Kaufman's 2018 balance sheet amount different from the 2018 amount reported in the disclosure note? Explain. 4. From the information provided, determine how Kaufman calculated the $107 million accumulated other comprehensive income in 2018.
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