Sbr (int/UK) Strategic Business Reporting

(1 mark) 

 

(Part (a): 9 marks max) 

 

 

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MO CK A  ANSWER S 

K APLAN P UBLISH IN G  

 

11 

(b) 

(i) 

Other comprehensive income (OCI) 

Many users ignore OCI, since the gains and losses reported there are not 

perceived to relate to an entity’s underlying trading activities. 

(1 mark)  

Some users do not understand the nature of OCI. 

(1 mark) 

Some perceive OCI as a ‘dumping ground’ used by the Board for gains or losses 

which are controversial. (1 

mark) 

As a result, material losses presented in OCI (such as large remeasurement 

losses on defined benefit pension schemes) may not be given the attention 

that they require. This is particularly true if a separate statement of other 

comprehensive income is presented. 

(1 mark) 

Reclassification adjustments add complexity to the financial reporting process 

and make financial reports less understandable. (1 

mark) 

Reclassification adjustments result in profits or losses being recorded in a 

different period from the change in the related asset or liability, and thus seem 

to contradict the Conceptual Framework’s definition of income and expenses.