Information about Comprehensive Income
Accounting
Comprehensive income is defined by the Financial Accounting Standards Board, or FASB,[1] as “the change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.”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.
Items included in comprehensive income, but not net income are reported under the accumulated other comprehensive income section of shareholder's equity.
Economic
Comprehensive income (or earnings) [2] attempts to measure the sum total of all operating and financial events that have changed the value of an owner's interest in a business. It is measured on a per-share basis to capture the effects of dilution and options. It cancels out the effects of Equity transactions for which the owner would be indifferent; issues of dividends; share buy-backs; share issues at market value.It is calculated by reconciling the the book-value-per-share from the start of the period to the end of the period. This is conceptually the same as measuring a child's growth by finding the difference between his height on each birthday. All other line items are calculated, and the equation solved for Comprehensive Earnings.
Shareholders' Equity, beg. of period - Dividends + Premium to book value received from new shares (and vice versa) + Comprehensive Earnings (and vice versa)
Shareholders' Equity, end of period
References
- [1]FASB Statement 130: Reporting Comprehensive Income (June 1997)
- [2]http://members.shaw.ca/RetailInvestor/earnings.html Details for Calculation
Financial Accounting Standards Board
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Headquarters Norwalk, Connecticut
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Founded 1973
Headquarters Norwalk, Connecticut
Slogan Serving the investment public through transparent information resulting from high-quality financial reporting standards, developed in an independent, private-sector, open due
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Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings.
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An Income Statement, also called a Profit and Loss Statement (P&L), is a financial statement for companies that indicates how Revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed
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Realization is generally understood in financial circles as the point at which revenue is recognized, typically through a transaction which involves the exchange of an asset, product, or service for cash or its equivalents.
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In finance, gain is a profit or an increase in value of an investment such as a stock or bond. Gain is calculated by fair market value or the proceeds from the sale of the investment minus the sum of the purchase price and all costs associated with it.
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Available for sale (AFS) is one of the three general classifications for financial assets (the other two being held for trading and held to maturity) under US GAAP (specifically, FAS 133) and four (the fourth being loans and receivables) under IFRS.
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security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities, such as bonds and debentures, and equity securities, e.g. common stocks. The company or other entity issuing the security is called the issuer.
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currency is a unit of exchange, facilitating the transfer of goods and/or services. It is one form of money, where money is anything that serves as a medium of exchange, a store of value, and a standard of value. A currency is the dominant medium of exchange.
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Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue. Net income can be distributed among holders of common stock as a dividend or held by the firm as retained earnings.
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Accumulated other comprehensive income is a subsection in equity where "other comprehensive income" is accumulated (summed).
Other comprehensive income is the difference between net income and comprehensive income and represents the unrealized gains and losses of
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Other comprehensive income is the difference between net income and comprehensive income and represents the unrealized gains and losses of
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Shareholders' equity is ownership equity spread out among shareholders whose class of share may have special rights attached to it. If all shareholders are in one and the same class, they share equally in ownership equity from all perspectives.
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