Comprehensive Income

Reporting Comprehensive Income

Firms can report comprehensive income below net income on the income statement, as an extra column on the statement of changes in shareholders’ equity, or through a statement of comprehensive income.

Items Under OCI Category

U.S. GAAP has four items that fall under the OCI category:

• Unrealized Gains/Losses on Certain Investment Securities: These are gains or losses from intercorporate investments classified as available for sale (AFS). The unrealized gain/loss in the accounting period does not affect net income for the period, but does impact shareholders equity as part of OCI.
• Unrealized Gains/Losses on Hedging Derivatives: A change in the fair value of derivatives contracts used for hedging is not part of net income, but is applied to equity through OCI.
• Foreign Currency Translation Adjustments: When a company consolidates foreign subsidiaries using the current rate method, the gain or loss resulting from the foreign exchange adjustments is reported as part of OCI.
• Pension Liability Adjustments: Actuarial gains and losses related to defined benefit retirement plans are recorded as part of OCI.