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Reading 45 - Error in Example 13
In example 13 / Reading 45 - Residual income Valuation:
In solution 2B: The adjustment to NI should be NI-OCI. In exhibit 12, year 2: OCI reduces Sharholders Equity directly. In other words, the OCI loss does not hit the Income statement or NI but adjusts the B/S directly. So, to adjust the earnings, the OCI loss should hit the NI. In other words, the adjustment should be NI-OCI and not NI+OCI.
Practice problem 12 elaborates on this logic.
Does anyone see this?
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