FSA: Other comprehensive income interest, includes, definition, net, currency

prav_Cfa7

At the end of last fiscal year, Vintenr’s Supply corp. report ed retained earnings of $215,000. This year, yearend retained earnings of USD245,000 and net income of $20,000, paid dividends of $10,000, paid interest expense of $5,000 and received dividends of $5,000. Vintner’s other comprehensive income for this year is closet to:
A. $25,000
B. $20,000
C. $15,000
D. $10,000
My opinion: Based on definition, Other comprehensive income (OCI) just includes: foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains or losses on available for sale investments.
I don’t see any relation between retained earnings and other comprehensive income. (OCI)
However, to calculate this quiz, I consider the OCI as one part of retained earnings (other than net income). Thus, the answer will be: $245,000$215,000$10,000=$10,000–>D
But I am still not satisfied with my answer. Can you explain for me this case more clearlyr?
Thanks.

tango_gs

actually, OCI is included in accumulated OCI, which flows directly into S/E.
if you’ve already covered corporate finance, you know that R/E+dividends=NI.
OCI = other changes in equity that are not included in NI but do flow into S/E.
Comprehensive income = OCI + NI

draz

The reason NI can be less than change in RE and Dividends paid is because Change in RE includes OCI which bypasses the NI. So for example, if you have plenty of Unrealized gains on AFS you will have a greater positive change in RE than NI  Dividends.
As for the question above, I agree with B.

thommo77

The explanation of super1 is quite acceptable. I definitely agree.
so the answer is B and there’s some problem with the quiz itself.
Thanks.

bdavi77962

I think to make this wrok you need to replace “retained earnings” with “shareholders equity”
Your calc tho, is off. Net inc is part of the change in SE
I would say:
Begining SE 215
Plus NI 20
Minus Div paid (10)
Ending SE 225
But since actual ending is 245 that implies other comp of 20