The trial balance of Kroeger Inc. included the following accounts as of December 31, 2021: Debits Credits Sales revenue 8,340,000Interest revenue 56,000Gain on sale of investments 116,000 Gain on debt securities 138,000 Loss on projected benefit obligation 156,000Cost of goods sold 144,000Selling expense 740,000Goodwill impairment loss 520,000Interest expense 26,000General and administrative expense 460,000The gain on debt securities represents the increase in the fair value of debt securities and is classified a component of other comprehensive income. Kroeger had 300,000 shares of stock outstanding throughout the year. Income tax expense has not yet been recorded. The effective tax rate is 25%.Required: Prepare a 2021 separate statement of comprehensive income for Kroeger Inc.

Kroeger Inc.

Statement of Comprehensive Income for the year ended December 31, 2021:

Income after taxes                                     $4,966,500

Gain on debt securities                                    138,000

Loss on projected benefit obligation            (156,000)

Net Income                                                $4,948,500

Explanation:

a) Kroeger Inc. Trial Balance as of December 31, 2021:

                                                         Debits       Credits

Sales revenue                                                    8,340,000

Interest revenue                                                    56,000

Gain on sale of investments                                 116,000

Gain on debt securities                                        138,000

Loss on projected benefit obligation    156,000

Cost of goods sold                                 144,000

Selling expense                                     740,000

Goodwill impairment loss                     520,000

Interest expense                                     26,000

General and administrative expense  460,000

b) Kroeger Inc. Income Statement for the year ended December 31, 2021:

Sales revenue                                              $8,340,000

less Cost of goods sold                                    144,000

Gross Profit                                                 $8,196,000

General & Admin. Expense      460,000

Selling expenses                       740,000     1,200,000

Operating Income                                     $6,996,000

Interest Revenue                                              56,000

Interest Expense                                             (26,000)

Goodwill impairment loss                             (520,000)

Gain on sale of investments                            116,000

Income before taxes                                $6,622,000

Income Tax (25%)                                     $1,655,500

Income after taxes                                     4,966,500

c) According to the corporate finance institute, "the Statement of Comprehensive Income provides a summary of a company's net assets over a given period of time.   It highlights the adjustments on equity and other comprehensive income (OCI).  Other comprehensive income includes net after taxes and other unrealized incomes minus unrealized losses, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses.

d) Goodwill impairment is recognized as a loss on the income statement under other operating expenses and as a reduction in the goodwill account.

e) Investopedia.com says that "projected benefit obligation (PBO) is an actuarial measurement of what a company will need at the present time to cover future pension liabilities."   Under U.S. GAAP, the adjustments for PBO are recorded through other comprehensive income in shareholders' equity and are amortized into the income statement over time.

f) A gain on sale of investments is the amount by which the proceeds from the sale of investments exceed the carrying amount of the investments.  It is reported as a non-operating gain in the income statement.

g) Securities that are held-for-trading are recorded on the balance sheet at their fair value, and the unrealized gains and losses are recorded on the income statement.  According to strategiccfo.com "Unrealized income or losses are recorded in an account called accumulated other comprehensive income, which is found in the owner's equity section of the balance sheet."  They are gains and losses from changes in the value of assets or liabilities that have not yet been settled and recognized.

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