The Statement of Comprehensive Income.
According to ASC 220-10-45-1, a company has the option to report comprehensive income, including net income and sther comprehensive income (other comprehensive income is the net of all the transactions for the year in the accumulated other comprehensive income account) either in a single continuous financial statement or in two separate but consecutive financial statements.
° Total net income along with the components that make up net income, and
° A total amount for the other comprehensive income along with the comporients that make up other comprehensive income.
• If the company chooses to present two separate but consecutive financial statements, it must present
° Total net income and the components of net income in the statement of net income, and
° Total other comprehensive income and the components of other comprehensive income ina statement of comprehensive income that immediately follows the statement of net income The statement of comprehensive income must begin with net income
The items that are considered other comprehensive income items are not reported on the income statement but instead are reported as a component of equity in the accumulated other comprehensive income account. They are expressly stated in the standards (ASC 220-10-45-10A). The items currently in this group include:
1) Foreign currency transiation adjustments.
2) Gains and losses on foreign currency transactions that are designated as, and are effective as economic hedges of a net investment in a foreign entity, commencing as of the designation date
3) Gains and losses on intra-entity foreign currency transactions that are of a long-term investment nature (that is, settlement is not planned or anticipated in the foreseeable future), when the enti ties to the transaction are consolidated, combined, or accounted for by the equity method in the reporting entity's financial statements.
4) Gains and losses on derivative instruments that are designated as, and qualify as, cash flow hedges.
5) For derivatives that are designated in qualifying hedging relationships, the difference between changes in fair value of the excluded components and the initial value of the excluded components recognized in earnings under a systematic and rational method.
6) Unrealized holding gains and losses on available-for-sale debt securities.
7) Unrealized holding gains and losses that result from a debt security being transferred into the available-for-sale category from the held-to-maturity category.
8) Gains or losses associated with pension or other postretirement benefits that are not recognized immediately as a component of net periodic benefit cost.
9) Prior service costs or credits associated with pension or other postretirement benefits.
10) Transition assets or obligations associated with pension or other postretirement benefits that are not recognized immediately as a component of net periodic benefit cost.
11) Changes in fair value attributable to instrument-specific credit risk of liabilities for which the fai value option is elected.
The items above may each be shown as either net of tax or before related tax effects with one amoun shown for the aggregate income tax expense or benefit related to the total of other comprehensive income.
Read Article :- Statement of Balance sheet.
If a company does not have any items of other comprehensive income in any period presented, it is no required to prepare a statement of other comprehensive income.
A company must report the accumulated balance of the items of other comprehensive income on the balance sheet as an element of owners' equity. Accumulated other comprehensive income should reported separately from stock, additional-paid-in-capital (APIC), and retained earnings.
However, the components of accumulated other comprehensive income may not be presented only as pa of the statement of changes in stockholders' equity. They must also be reported as described above in separate statement of comprehensive income.
Exam Tip: It is possible for a company to have none of these items. However, candidates need to b able to identify the items that are included as accumulated other comprehensive income items.
An example of a single continuous financial statement presenting net income followed by other compreh sive income follows.