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Statement of Comprehensive Income

Comprehensive income is the change in equity from non-owner sources during a period, including net income plus changes in accumulated other comprehensive income. Comprehensive income includes all equity changes except those from owners' investments and distributions, and is calculated as net income plus the change in accumulated other comprehensive income, which is a permanent equity account not closed at year-end like temporary income statement accounts.

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72 views2 pages

Statement of Comprehensive Income

Comprehensive income is the change in equity from non-owner sources during a period, including net income plus changes in accumulated other comprehensive income. Comprehensive income includes all equity changes except those from owners' investments and distributions, and is calculated as net income plus the change in accumulated other comprehensive income, which is a permanent equity account not closed at year-end like temporary income statement accounts.

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Lama Al Hout
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Comprehensive Income

Comprehensive income is the change in equity (net assets) of an


entity from non-owner sources that arise during a period from
transactions and other events. It includes all changes in equity during
a period except those resulting from investments by owners and
distributions to owners.

Net income (loss) for a period is closed to retained earnings at the end
of the reporting period, so net income (loss) increases or decreases
equity. Comprehensive income includes everything on the income
statement plus the amount of change during the period in
accumulated other comprehensive income (OCI), another equity
account. The specific items reported on the accumulated other
comprehensive line in equity are covered in this volume in the topic
Statement of Comprehensive Income.

Total comprehensive income for a year includes everything on the


income statement (that is, net income for the year) plus the
transactions for the year in the accumulated other comprehensive
income account. The accumulated other comprehensive income
account is a permanent balance sheet account, so it is not closed out
at the end of each year the way the temporary, income statement,
accounts are. Thus, total comprehensive income for a year is net
income plus the amount of change during the year in accumulated
other comprehensive income.

Comprehensive Income = Net Income (Loss) + ∆ in


Accumulated OCI

• If the balance in accumulated OCI increases during a period (a net


credit), comprehensive income will be greater than net income
for the period.

• If the balance in accumulated OCI decreases during a period (a net


debit), comprehensive income will be less than net income for
the period.

• In the event of a net loss for the period, comprehensive income or


loss for the period will depend on whether the transactions in
accumulated OCI for the period represent a net credit or a net
debit. Comprehensive income is more inclusive than net income.
In other words, net income is a part of compre- hensive income,
but it does not constitute the whole of comprehensive income.

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