Choice "B" is correct. Comprehensive income is equal to current period net income plus current period other comprehensive income. Sales revenue, cost of goods sold and operating expense can be used to calculate net income:
Net income |
Net income$800,000 - $600,000 - $90,000$110,000 |
The unrealized holding gain on available-for-sale securities is not a component of net income, but is included in other comprehensive income. Total comprehensive income is calculated as follows:
Comprehensive income+ Other comprehensive income |
Comprehensive income$110,000 + $30,000$140,000 |
Choice "a" is incorrect. This is the other comprehensive income to be reported for the period. Total comprehensive income includes net income and other comprehensive income items.
Choice "c" is incorrect. This is the net income for the period. Total comprehensive income includes net income and other comprehensive income items. The unrealized holding gain on available-for-sale securities is an other comprehensive income item and must be included in comprehensive income.
Choice "d" is incorrect. Comprehensive income is not equal to the gross profit of $200,000 ($800,000 sales revenue - $600,000 cost of goods sold).
