Investment Company (IC)began operations on January 1, 2012. It acquired the following investments: IC earned interest of $12,000 during 2012. Dividends of $16,000 were declared on the shares it owned during 2012. Of that amount, $9,000 was received in December 2012 and $7,000 was received in January 2013 (note that the ex-dividend date for these shares was prior to the end of the year). How much would be recorded as accumulated other comprehensive income on IC's balance sheet at December 31, 2012?

Question

Investment Company (IC)began operations on January 1, 2012. It acquired the following investments:  IC earned interest of $12,000 during 2012. Dividends of $16,000 were declared on the shares it owned during 2012. Of that amount, $9,000 was received in December 2012 and $7,000 was received in January 2013 (note that the ex-dividend date for these shares was prior to the end of the year). How much would be recorded as accumulated other comprehensive income on IC's balance sheet at December 31, 2012?

Quizplus · Accepted Answer

Accumulated other comprehensive income (AOCI) represents unrealized gains or losses on certain types of investments, such as available-for-sale securities. In this question, there is no mention of any available-for-sale securities. Therefore, there should be no AOCI balance. As a result, the answer is a gain of $10,000 as a part of the comprehensive income.

Investment Company (IC)began Operations on January 1, 2012