The Massoud Consulting Group reported net income of $1,380,000 for its fiscal year ended December 31, 2021. In addition, during the year the company experienced a positive foreign currency translation adjustment of $370,000 and an unrealized loss on debt securities of $40,000. The company's effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income is displayed net of tax. Required: Prepare a separate statement of comprehensive income for 2021. (Amou

Question

Kaleb Schwartz

Business

27 November, 12:45

The Massoud Consulting Group reported net income of $1,380,000 for its fiscal year ended December 31, 2021. In addition, during the year the company experienced a positive foreign currency translation adjustment of $370,000 and an unrealized loss on debt securities of $40,000. The company's effective tax rate on all items affecting comprehensive income is 25%. Each component of other comprehensive income is displayed net of tax. Required: Prepare a separate statement of comprehensive income for 2021. (Amou

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Beatrice Bridges · Answer 1

The preparation of the separate statement of comprehensive income for 2021 is shown below:

Positive foreign currency translation adjustment $370,000

Less - tax expense on foreign currency translation adjustment ($92,500)

Less: unrealized loss on debt securities ($40,000)

Add: tax expense on unrealized loss $10,000

Net comprehensive income $247,500

We simply multiply the 25% tax rate with respective item to find out the tax expense