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Statement of Comprehensive Income Benefits and Example with its Uses

statement of comprehensive income

As a result, the company will experience a gain known as “funded surplus” as long as it earns the required return on its planned assets to cover any growth in pension obligations. Comprehensive income is the sum of a company’s net income and other comprehensive income. Over 1.8 million professionals statement of comprehensive income use CFI to learn accounting, financial analysis, modeling and more. Start with a free account to explore 20+ always-free courses and hundreds of finance templates and cheat sheets. Other comprehensive income is also not the same as “comprehensive income”, though they do sound very similar.

statement of comprehensive income

Additionally, it can improve comparability where IFRS standards permit similar items to be recognised in either profit or loss or OCI. The term basic earnings per share refers to IFRS companies with a simple capital structure consisting of common shares and perhaps non-convertible preferred shares or non-convertible bonds. The impact of these types of financial instruments is the potential future dilution of common shares and the effect this could have on earnings per share to the common shareholders.

Profit, loss and other comprehensive income

The interaction between profit or loss and OCI is unclear, especially the notion of reclassification and when or which OCI items should be reclassified. A common misunderstanding is that the distinction is based upon realised versus unrealised gains. It is simply incorrect, to state that only realised gains are included in the statement of profit or loss (SOPL) and that only unrealised gains and losses are included in the OCI.

These various items are then totaled into a comprehensive income total at the bottom of the report. A positive balance in this report will increase shareholders’ equity, while a negative balance will reduce it; the change appears in the accumulated other comprehensive income account. The purpose of comprehensive income is to show all operating and financial events that affect non-owner interests. As well as net income, comprehensive income includes unrealized gains and losses on available-for-sale investments. It also includes cash flow hedges, which can change in value depending on the securities’ market value, and debt securities transferred from ‘available for sale’ to ‘held to maturity’—which may also incur unrealized gains or losses. Gains or losses can also be incurred from foreign currency translation adjustments and in pensions and/or post-retirement benefit plans.

Why is a statement of comprehensive income important?

The balance of AOCI and the balance of Retained Earnings, which combines past and present earnings and past and present dividends, are shown in the Equity portion of the Balance Sheet. These materials were downloaded from PwC’s Viewpoint ( under license.

This November 2023 edition incorporates updated guidance and interpretations. After the CI statement is prepared, we can start preparing the balance sheet. Here’s an example comprehensive statement attached to the bottom of our income statement example.

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