IA Comprehensive Income

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›Comprehensive Income

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Definition of 'Comprehensive Income'

The change in a company's net assets from non owner sources over a specified period of time. Comprehensive income is a statement of all income and expenses recognized during that period. The statement includes revenue, finance costs, tax expenses, discontinued operations, profit share and profit/loss.

The income of a company from any transaction that does not involve an owner's investment or distribution to an owner. For example, if a company exchanges two currencies for practical, rather than investment, purposes, any profit from the transaction may be considered comprehensive income. Comprehensive income contrasts with net income.

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›explains 'Comprehensive Income

Companies typically report comprehensive income in a separate statement from income resulting from owner changes in equity, but have the option of providing information in a single statement. Many firms shy away from the single statement approach because it mixes owner and non owner activity, which can muddle the underlying information.

›What is the difference between net income and comprehensive income?

The difference between net income and comprehensive income is known as other comprehensive income.

Other comprehensive income includes unrealized gains and losses on certain investments in securities, foreign currency items, and certain pension liability adjustments.

Net income is reported on the income statement and is included in the retained earnings section of stockholders’ equity. Other comprehensive income items are not reported on the income statement, and are included in the accumulated other comprehensive income section of stockholders’ equity.

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