Financial Reporting and Analysis II
Reading 21. Understanding Income Statements
Learning Outcome Statements
l. describe, calculate, and interpret comprehensive income;
m. describe other comprehensive income and identify major types of items included in it.
CFA Curriculum, 2020, Volume 3
Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Subject 9. Comprehensive Income
Comprehensive income is the sum of net income and other items that must bypass the income statement because they have not been realized, including items like an unrealized holding gain or loss from available-for-sale securities and foreign currency translation gains or losses. These items are not part of net income, yet are important enough to be included in comprehensive income, giving the user a bigger, more comprehensive picture of the organization as a whole.
The following table is from the Statement of Stockholders' Equity section of the 3M's 2001 annual report.
This section describes the composition of comprehensive income. It begins with net income and then includes those items affecting stockholders' equity that do not flow through the income statement. For 3M, these items include:
- Cumulative translation adjustment.
- Minimum pension liability adjustment.
- Unrealized gains (losses) on available-for-sale investments.
- Unrealized gains (losses) on derivative investments.
FASB has taken the position that income for a period should be all-inclusive comprehensive income. Comprehensive income may be reported on an income statement or separate statement, but is usually reported on a statement of stockholders' equity.
User Contributed Comments 3You need to log in first to add your comment.
However It will not include prior period adjustments
Stated on Stock holders Equity Statement
For IFRS it needs to be reconciled at the bottom of the income statement...
And also unrealized gain/losses on derivatives are actually including in net income unless the company applies hedge accounting...