Reporting Comprehensive Income Gladbrook Corporation reported income from operations of $500,000 and net income of $240,000 for 2000. In addition to its income statement, Gladbrook reported a statement of other comprehensive income, as follows:

Gladbrook Corporation is accumulating money for a major expansion in its facilities and in January 2000 invested $600,000 in marketable securities, which increased in value to $688,000 at December 31, 2000. Because the securities have not been sold and the gain is unrealized, the $88,000 increase is not included in net income. Gladbrook paid no dividends in 2000.

a. By what amount will retained earnings increase in 2000?

b. By what amount will Gladbrook’s reported net assets increase in 2000?

c. As a potential investor, does the disclosure of comprehensive income provide useful information? Explain.

d. Would your response to part c change if the value of the securities declined in 2001 and Gladbrook were to sell them for $580,000? Explain why.

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Gladbrook Corporation Statement of Other Comprehensive Income For the Year Ended December 31, 2000 Net income Gain on holding certain marketable securities Comprehensive income $240,000 88,000 $328,000