Selected condensed information (in millions) for Investments R Us Company, a public company, follows for the year ended December 31, 2015. Where appropriate, the company has chosen to report fair value adjustments in other comprehensive income.
Revenue from investment in associate.........................................$ 4
Gain on fair value adjustment of trading investments.........................2
Gain on disposal of land.........................................................26
Income tax expense.............................................................781
Interest expense...................................................................299
Interest revenue.....................................................................6
Dividend revenue..................................................................3
Operating expenses...........................................................4,616
Loss on sale of trading investments..........................................194
Loss on fair value adjustment-strategic equity investment (net of tax) 68
Other expenses....................................................................21
Revenues.......................................................................7,240
Instructions
(a) Prepare an income statement and separate statement of comprehensive income for the year ended December 31, 2015.
(b) Investments R Us Company had an opening balance in its Accumulated Other comprehensive Loss account of $150 million. What is the ending balance it would report in the shareholders' equity section of its balance sheet at December 31, 2015?
Taking It Further
Explain why a company may want to report gains and losses on fair value adjustments for its investments in other comprehensive income instead of including them in profit.