Comprehensive Income
SFAS 130, June 1997
“Reporting Comprehensive Income”
“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
(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)
(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: 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
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
–> 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
–> 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
–> 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
–> 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”
–> 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
–> 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