What is the difference between OCI and OCE?
Tom Clendon
ACCA SBR online lecturer helping students pass exams | former marker & examiner | x3 PQ award winner | podcaster
The two are often confused – so let us thrash this out.
What is OCI?
OCI is an abbreviation for Other Comprehensive Income. This is an annual performance statement so is prepared for the year ended. It is presented after the profit and loss account and together they form the statement of total comprehensive income.?
The idea of OCI is that it will present certain gains and losses that have been recognised directly in equity during the year because accounting standards prohibit their recognition in the profit and loss account. An example of such a gain not included in the profit and loss account and thus appearing in OCI is a simple revaluation on property, plant and equipment. Other examples include group foreign exchange differences and remeasurement gains or losses on defined benefit pension schemes.
By reporting such gains and losses in OCI it ensures that users do get a faithful representation (complete) picture of all gains and losses recognised in the accounting period despite their omission from the profit and loss account. It also helps to keep the profit and loss account relevant (predicable) because the type of gains and losses in OCI tend to be unusual, non-recurring and unrealised gains.?
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What is OCE?
OCE is an abbreviation for Other Components of Equity. It is a reserve and therefore part of the equity of the company.?As an equity reserve, it is a balance that is listed on the statement of financial position. Equity represents the owner’s interest in the business. Every company will have share capital and retained earnings as part of their equity. OCE simply represents the rest!?
OCE is therefore an umbrella term for various reserves. Its balance will include the accumulated gains and losses arising from revaluing property, plant and equipment as well as the exchange differences arising from the retranslation of overseas subsidiaries. In addition, OCE can include items that have not passed through OCI e.g. the equity element of a convertible loan and the difference arising in the group accounts when the parent and NCI transact with each other without control?changing.
Recap?
So OCI reports gains and losses for the year that are excluded from that year’s profit and loss account.
And OCE is a generic reserve on the statement of financial position that is not retained earnings!?
Tom Clendon is the ACCA SBR online lecturer and podcaster who can help YOU pass your SBR exams (just reach out)
國立東華大學學生
1 年Hi Tom, could you please explain? We don't use OCE; instead, we use AOCI (Accumulated OCI). I'm very confused. Is "other components of equity" only used in ACCA for exam purposes, or is it widely used in IFRS in publicly traded companies in the UK or Europe??? In IAS 16 PPE, Revaluation Upwards CR "Gain on Revaluation (OCI)" closed to "Revaluation Surplus or Reserve". While in IFRS 9, FVOCI fair value adjustment upward CR Unrealised Holding Gain-OCI closed to "OCE".?One close to "Revaluation Surplus" (an account under "OCE"), and another close to "OCE" directly. It's inconsistent and unreasonable. Should create another detailed account for closing "Unrealised Holding Gain-OCI"??? We closed all of the OCI into AOCI. ?? ??
ACCA professional level (9/13) B.com Graduate Ex-BDO Rise
1 年Every year we keep on adding profits/losses to form Retained earnings. Do we do the same in case of OCI and OCE? Like keep on adding OCI to form OCE. Can we say that?
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1 年So all items other than share capital and retained earnings are part of OCE like share premium, revaluation reserve?
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2 年To me when we talk about OCI; we refer to those changes resulting?from other, non-primary or non-revenue producing activities?of the company that are not reported in profit or loss?as required by a specific IFRS standard. Forexample; Actuarial gains or losses under IAS 19, Changes in revaluation surplus in line with IAS 16, gains and losses arising from translation of financial statements of foreign Subs etc OCE are all the other elements of Equity belonging or attributable to the equity shareholders ie to those who are financing the activities of the group. Due to the fact that the main equity elements are Share capital, or Retained Earnings may be. The others can be aggregated to OCE and this can cover elements like Share premiums, Revaluation reserves, NCI, General reserves, Translation reserves etc.
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2 年OCI - (Other Comprehensive income) is a part of the Statement of Comprehensive income where non-cash items that are not from the ordinary course of business are recorded. OCE - (Other Components of Equity) This is part of reserves in the Equity side of the Statement of Financial position where balances from OCI are transferred.