Comprehensive Income

SFAS 130, June 1997
“Reporting Comprehensive Income”

Total change in equity = (A) + (B)
(A) Comprehensive Income
(B) Changes in equity due to (B1) and (B2)
(B1) Investments by owners
(B2) Distributions to owners

Comprehensive income = (1) + (2)
(1) Net income
(2) Other comprehensive income (OCI)

Reporting other comprehensive income (OCI)
Three formats
Format 1: Reported in the income statement below net income
Format 2: Reported in the separate statement of comprehensive income
Format 3: Reported in the statement of changes in equity

 Format 1 or Format 2 is encouraged
Format 1 or Format 2 is “superior” to Format 3

Items reported as other comprehensive income (OCI)

A. Investments in debt and equity securities
1. Unrealized holding gains and losses
–> on “available for sale” securities

2. Unrealized holding gains and losses
–> due to the transfer from (a) to (b)
(a) held-to-maturity securities
(b) available-for-sale securities

3. The portion of impairment not recognized in earnings
–> for (c) and (d)
(c) available-for-sale debt securities
(d) held-to-maturity debt securities

4. Subsequent increases and decreases
–> in the fair value of available-for-sale securities
–> previously impaired

B. Hedges
5. Gains and losses from the effective portion of cash flow hedges

6. Gains and losses on the hedges of a net investment in foreign operations

C. Pension and other postretirement benefits
7. The portion of gains or losses
–> that is not recognized in net periodic pension cost
–> “corridor approach”

8. Prior service costs or credits in pension

9. Transition assets or obligations in pension
–> not recognized in net periodic pension cost

D. Foreign currency transactions
10. Foreign currency translation adjustments

11. Gains and losses on intra-entity foreign currency transactions


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