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CFA Level I · CFA Level I Exam · Analyzing Income Statements

Under IFRS, which of the following items is most likely reported in other comprehensive income and later reclassified to profit or loss?

Foreign currency translation gains on a foreign subsidiary's net assets are reported in OCI and reclassified to profit or loss on disposal of the operation. Pension remeasurements and revaluation surpluses stay in OCI and are not reclassified to profit or loss.

  1. ARemeasurement of a net defined benefit pension liability
  2. BForeign currency translation gains on a foreign subsidiary's net assetsCorrect
  3. CRevaluation surplus on property, plant and equipment

Explanation

Foreign currency translation adjustments are recognized in OCI and are reclassified to profit or loss when the foreign operation is disposed of. Pension remeasurements and PP&E revaluation surpluses go to OCI under IFRS but are never reclassified to profit or loss, though they may be transferred within equity.

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