Which of the following is NOT included in Other Comprehensive Income (OCI)?

• A. Pension adjustments
• B. Unrealized gains and losses on AFS securities
• C. Income tax expenses
• D. Effective portions of cash flow hedges

Answer: (C)

Other Comprehensive Income (OCI) includes certain revenues, expenses, gains, and losses that are excluded from net income on the income statement. Among the items typically recognized in OCI are pension adjustments, unrealized gains and losses on available-for-sale (AFS) securities, and the effective portions of cash flow hedges.

Income tax expenses, however, are not included in OCI. Rather, they are part of the income statement and are deducted from pretax income to arrive at net income. Consequently, the correct answer identifies an item that is typically presented on the income statement rather than in OCI.

This distinction is important because it highlights the purpose of OCI: to provide a comprehensive view of a company's financial performance by adding certain items that affect equity but do not impact the net income in the same period. Understanding these components is essential for accurate financial reporting and analysis.