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ACCA Applied Knowledge · Financial Accounting · Statement of profit or loss and other comprehensive income

Mirth Co has profit for the year of $85,000. It has an equity investment held at fair value through other comprehensive income, which rose in value by $12,000 in the year, and it recognised a revaluation surplus of $30,000 on property. Income tax of $6,000 arose on the revaluation of property and is to be shown in other comprehensive income. What is total comprehensive income?

Total comprehensive income is $121,000. Other comprehensive income is the $12,000 investment gain plus the $30,000 property surplus, less $6,000 related tax, giving $36,000, which is added to profit of $85,000. Ignoring the tax on the revaluation would wrongly give $127,000.

  1. A$121,000Correct
  2. B$127,000
  3. C$115,000
  4. D$85,000

Explanation

Other comprehensive income = $12,000 + $30,000 - $6,000 tax = $36,000. Total comprehensive income = $85,000 + $36,000 = $121,000. Ignoring the tax gives $127,000, which overstates the result.

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