Chapter 12
Using Accounting Information
355
associated with the disposal of net assets, are presented in a separate section called discontinued
operations. P&G’s net earnings from discontinued operations are highlighted in Figure 12.3.
other comprehensive income
A corporation’s income statement, unlike that of a sole proprietorship’s, may contain “other
comprehensive income.” Other comprehensive income can either be shown as a separate section
in the income statement, or separated into a stand-alone statement. P&G chose to report its
other comprehensive income in a stand-alone statement, called “Consolidated Statement of
Comprehensive Income,” which is shown in Figure 12.4. This statement tracks the value of
activities that are not part of the main operations. Other comprehensive income can arise from
changes in the value of assets such as investments, property, plant and equipment, and other items
not in the scope of this textbook. The increases or decreases in the value of assets result in gains or
losses for a corporation. Such gains and losses are discussed in more details below.
the Procter & gamble company
consolidated statement of comprehensive income
amounts in millions; Year ended June 29, 2014
2014
net earnings
$11,785
otHer comPreHensiVe income (loss), net of taX
Financial statement translation
1,044
Unrealized gains/(losses) on hedges (net of $209, $92 and $441 tax, repectively)
(347)
Unrealized gains/(losses) on investment securities (net of $4 $5 and $3 tax,
respectively)
9
Defined benefit retirement plans (net of $356, $637 and $993 tax, respectively)
(869)
total otHer comPreHensiVe income (loss), net of taX
(163)
total comPreHensiVe income
11,622
LeSS TOTAL COMPreHeNSIVe INCOMe ATTrIBUTABLe TO NONCONTrOLLINg INTereSTS
150
total comPreHensiVe income attriButaBle to Proctor & gamBle
$11,472
_______________
FIgUre 12.4
gains and losses
Sometimes a corporation may incur gains or losses through transactions or events that are not
part of its daily operating activities. In most cases, a
gain
is an increase in the value of long-term
assets that gives the assets a higher worth than their net book value. A gain increases the value of
shareholders’ equity. On the other hand, a
loss
is a decrease in the value of long-term assets that
gives the assets a lower worth than their net book value. A loss decreases the value of shareholders’
equity. Gains and losses may result from selling assets such as equipment or recording the changes
in value of investments. In other cases, gains or losses happen with activities irrelevant from long-
term assets. For example, the proceeds from winning a lawsuit settlement are considered a gain,
while expenditures from losing a lawsuit settlement are considered a loss.
In the case of P&G, the company experienced both gains and losses in 2014. As highlighted in
Figure 12.4, the company reported an unrealized gain on investment securities in 2014. The gains
and losses are reported on the statement of comprehensive income as being “unrealized” because
the investment securities have yet to be sold. The gains and losses are estimated based on available
fair market value information. The estimation allows users of the financial statements to have a
