The following financial data is taken from the annual report of The Emma Company:

Explain

(a) what “other comprehensive income” is and how it differs from net income,

(b) what happened to the value of The Emma Company’s available-for-sale securities each year, and

(c) what caused the cumulative foreign currency translation adjustment to increase or decrease each year. 

Explain why The Emma Company will pay income taxes on its net income but not its other comprehensive income.

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(in thousands) 2013 2014 2015 Net income.... $20,493 $21,450 $21,846 Other comprehensive income (loss) Net unrealized gain (loss) on available-for-sale securities (138) 219 33 Cumulative foreign currency translation adjustment 630 (549) (96) Total other comprehensive income $20,985 $21,120 $21,783