Statement of Comprehensive Income
BeginnerThe statement of comprehensive income shows a company's net income for a period together with other gains and losses that are not included in net income, giving a fuller picture of how equity changed.
Some gains and losses are recognised in equity rather than in the income statement. Examples include certain changes in the value of investments, gains or losses from translating the accounts of foreign subsidiaries into the reporting currency, and some changes in pension plan values. These items are called other comprehensive income.
The statement of comprehensive income starts with net income and then adds or subtracts these other items to arrive at total comprehensive income.
For example, a company might report net income of 5 million, plus a 0.4 million gain from currency translation and minus a 0.1 million loss on certain investments. Its total comprehensive income would be 5.3 million.
Companies can present this information as one continuous statement or as two statements: a separate income statement followed by a statement of comprehensive income. Most investors focus on net income, but other comprehensive income can be significant for companies with large foreign operations, investment portfolios or pension plans.
For worked examples and full lessons, visit notesbysara.org.