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Reliance Industries Limited: Accounting for Other Comprehensive Income
內容大綱
In its annual report for the financial year (FY) 2018/19, Reliance Industries Limited reported an unprecedented ₹596.74 billion as other comprehensive income (OCI). The OCI affected the statement of profit and loss (P&L), the balance sheet, and the statement of changes in equity. India converged its accounting standards with the International Financial Reporting Standards, effective FY 2017 onward. The converged accounting standards required an entity to present the statement of P&L and OCI in two sections, with the sum of the two reported as the total comprehensive income. The requirement to present a separate statement of changes in equity was also introduced in India. Though the concept of OCI was new to India, it had been used globally since 1997. The classification of income and expenses to either P&L or OCI as well as the subsequent reclassification of OCI to P&L have remained subjects of debate. The exercise discusses the nature, reporting, and reclassification of OCI, as well as its impact on key financial ratios.
學習目標
After working through the exercise and assignment questions, students will be able to do the following:<ul><li>Understand the concept of total comprehensive income.</li><li>Understand the nature of OCI as well as the controversy surrounding it.</li><li>Visualize the impact of OCI on the balance sheet, the statement of P&L, and the statement of changes in equity.</li><li>Understand the interrelationship between the balance sheet, the statement of P&L, and the statement of changes in equity.</li><li>Appreciate how the reclassification of OCI affects various financial statements.</li><li>Understand how OCI affects key financial ratios including return on equity, the debt-to-equity ratio, and book value per share.</li></ul>