On January 1, 2017, Tri-State Industries had cash and common stock of $180,000. At that date the company had no other asset, liability or equity balances. On January 2, 2017, it purchased $160,000 of equity securities for cash that it classified as available-for-sale. It received cash dividends of $12,000 during the year on these securities. In addition, it had an unrealized holding gain on these securities of $32,000 net of tax. Based on this information, what is the amount of comprehensive income in 2017?
A) $44,000
B) $20,000
C) $12,000
D) $32,000

Question

Quizplus · Accepted Answer

Comprehensive income is the sum of net income plus other comprehensive income (OCI). 
Net income = $0 (no transactions other than unrealized gain, which is not included in net income) 
OCI = Unrealized holding gain on equity securities - net of tax = $32,000 
Therefore, comprehensive income = $0 + $32,000 = $32,000 
In addition, the company received cash dividends of $12,000 during the year on these securities. 
Therefore, total comprehensive income = $32,000 + $12,000 = $44,000

On January 1, 2017, Tri-State Industries Had Cash and Common