Reporting and Interpreting Stockholders’ Equity: Solution

Your company has both debt-type AFS and passive equity-type AFS investments. You did not sell them during the fiscal year. Your debt investments increased in value while your equity investments depreciated. How will this situation affect your net earnings for the year end? Ignoring the effects of all other transactions, will your comprehensive income for the year be greater or lower than your net income? How will these changes affect your cash flows from operations? Can you make a definite judgement on the change in the ending balance of the stockholder’s equity on the balance sheet, assuming that the company did not pay any dividends at year end?