Question

An inexperienced accountant for Blue Spruce Corp. showed the following in the income statement: income before income taxes $436,000 and unrealized gain on available-for-sale securities (before taxes) $85,500. The unrealized gain on available-for-sale securities and income before income taxes are both subject to a 32% tax rate. Prepare a correct statement of comprehensive income.

Answer 1

Blue Spruce Corp.

Statement of Comprehensive Income

Income before income taxes $436,000

Less: Income Tax $139,520

($436,000 * 32%)

Net Income $296,480

Other comprehensive income (loss):

Unrealized gain on available-for-sale $58,140

securities, net of tax ($85500*68%)

Total Comprehensive Income $354,620