Verizon Communications Inc. reported the following in its 2016 statement of shareholders equity. 2016 Accumulated Other Comprehensive
Question:
Verizon Communications Inc. reported the following in its 2016 statement of shareholders’ equity.
2016 | |
Accumulated Other Comprehensive Income (Loss) | |
Balance at beginning of year | $ 550 |
Foreign currency translation adjustments | (159) |
Unrealized gains (losses) on marketable securities | (55) |
Unrealized gains (losses) on cash flow hedges | 198 |
Defined benefit pension and postretirement plans | 2,139 |
Other comprehensive income (loss) | 2,123 |
Balance at end of year | $2,673 |
Required:
a. In general, what is “Accumulated other comprehensive income (loss)”?
b. Explain each of the following components of Verizon’s accumulated other comprehensive income account:
• Foreign currency translation adjustment
• Unrealized losses on marketable securities
• Defined benefit pension and postretirement plans
c. If the U.S. $ is stable in 2017 vis-à-vis the foreign currency of Verizon’s foreign subsidiaries, what will be the effect on the foreign currency translation adjustment?
d. If the accountant classified the company’s investment in equities as Held-to-Maturity, what impact would have the large drop in value in the equity market?
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III