Comments (11)

Feb 16, 2013

Don't think so, no.

Feb 16, 2013

accumulated other comprehensive earnings is like accumulated depreciation. It's an accounting convention so there is no cash exchanged

Feb 16, 2013
packmate:

accumulated other comprehensive earnings is like accumulated depreciation. It's an accounting convention so there is no cash exchanged

does the change go to the cash flow statement? since the change in accum dpreciation is added back in the cash flow statement? thanks!

Feb 16, 2013

No AOCI does not go to the cash flow statement. Transactions that could lead to AOCI can go into the CF statement, such as the purchase of marketable securities, derivatives, etc. Those items can eventually be sold and then go to the CF statement. There can be transactions that can affect the income statement as well but that's usually when you have some loss or impairment that has to be expensed.

Feb 16, 2013
ERWB:

No AOCI does not go to the cash flow statement. Transactions that could lead to AOCI can go into the CF statement, such as the purchase of marketable securities, derivatives, etc. Those items can eventually be sold and then go to the CF statement. There can be transactions that can affect the income statement as well but that's usually when you have some loss or impairment that has to be expensed.

how about the increase in AOCI? when using the indirect approach to calculate cash flow, should i add back the difference between prior year and this year?

Feb 16, 2013

The change just affects the owner's equity. Depreciation is only similar to AOCI in that it's an accounting rule. They are two different things. You need to read the notes for the AOCI. There should be a statement going over the four items that comprise the AOCI. AOCI is a long explanation.

Jan 18, 2014

Hello guys I would like to ask how we confront OCI in the balance sheet. More specifically If I want to calculate the cash flows to share holders do I count the OCI??

Genereally what I should do when I face a account like this???

Thank you.

Jan 18, 2014

if you look at SFAS 130 u'll see that other comprehensive income is part of total comprehensive income but is generally exluded from net income. Accumulated comprehesive income is the amount(s) in comprehensive income either increase of decrease shareholder's equity but not derived from the income statement or through any company transactions in its own equity shares.

Generally, other comprehesive income includes the following items: foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains or losses on available-for-sale investments and derivative instruments.

Hope this helps

Jan 18, 2014

Since AOCI is non cash AND doesn't flow through the income statement, you should not adjust for it in your FCF calculations. If it flows through the income statement, it would be in your retained earnings account and not AOCI. I am also not familiar with all the accounts in AOCI but the most common ones like unrealized gains/losses on available for sale securities are non-cash.

Jan 18, 2014
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