Under IndAS 1, which of the following accounting items is recognized under Other Comprehensive Income (OCI) rather than in the regular Profit and Loss statement?

[ A ]Revenue from selling mobile prepaid data plans to retail customers

[ B ]Remeasurement gains/losses on defined benefit employee pension plans, changes in revaluation surplus of PPE, and foreign currency translation differences of overseas subsidiaries[ CORRECT ]

[ C ]Payment of monthly office electricity and water utility bills

[ D ]Cash payments made to purchase raw material inventory from domestic suppliers

Takeaway

Option B is correct: Remeasurement gains/losses on defined benefit employee pension plans, changes in revaluation surplus of PPE, and foreign currency translation differences of overseas subsidiaries

Derivation

Other Comprehensive Income (OCI) captures revenues, expenses, gains, and losses that are required or permitted by IndAS to bypass the regular Profit and Loss account to avoid distorting operational net profit with volatile, non-operational valuation adjustments. Standard OCI items include: (1) Actuarial remeasurement gains/losses on defined benefit pension/gratuity obligations, (2) Unrealized gains/losses on PPE revaluation surplus, (3) Gains/losses on translating financial statements of foreign operations, and (4) Fair value changes on cash flow hedges. This tests OCI classification. A common error is confusing OCI with operating revenue.

Why the others fail

A — Revenue from selling mobile prepaid data plans to retail customers

Customer mobile service revenues are core operational revenues recognized directly in the regular Profit and Loss statement.

C — Payment of monthly office electricity and water utility bills

Electricity and utility expenses are regular administrative operating costs recognized in the profit and loss account.

D — Cash payments made to purchase raw material inventory from domestic suppliers

Raw material inventory purchases are operating working capital transactions recorded in the cost of goods sold.