What Is Comprehensive Income?

Comprehensive income refers to the changes in the value of a company's net assets during a specific period, such as a month, quarter, or fiscal year, from non-owner sources. It includes net income and other comprehensive income, such as unrealized income. Comprehensive income provides a complete view of a company's income, some of which may not be fully captured on the income statement.

Understanding Comprehensive Income

Comprehensive income is the change in the value of equity that stems from non-owner and traditional income sources. Put simply, it is the sum of a company's net income and other comprehensive income over a certain time. As noted above, other comprehensive income includes unrealized income or unrealized gains or losses.

Comprehensive income sheds light on changes in equity. Since it includes net income and unrealized income and losses, it provides the big picture of a company's value. It's also important for investors, who can use it to help make decisions about the feasibility of potential investments.

What's Included and Excluded in Comprehensive Income

Comprehensive income shows all operating and financial events that affect non-owner interests. Along with net income, it includes unrealized gains and losses on available-for-sale investments.

It also includes cash flow hedges, which can change in value depending on the securities' market value, and 澳洲幸运5官方开奖结果体彩网:debt securities transferred from available for sale to held to maturity, which may also incur unrealized gains or losses. Gains or losses can also be incurred from foreign currency translation adjustments and in pensions and/or post-retirement benefit 🍬plans.

Income excluded from the income statement is reported under accumulated other comprehensive income of the 澳洲幸运5官方开奖结果体彩网:shareholders' equity section. Income from non-owner sources increases the value of a company. However, since it is not from the ongoing operations of the company's normal line of business, it♛ is not appropriate to include it in the traditional income statements.

Comprehensive income excludes owner-caused changes in equity, such as the sale of stock or purchase of 澳洲幸运5官方开奖结果体彩网:Treasury shares.

Statement of Comprehensive Income

A company's 澳洲幸运5官方开奖结果体彩网:income statement details revenues and expenses, including taxes and interest. Its bottom line is 澳洲幸运5官方开奖结果体彩网:net income. However, net income only recognizes earned income and incurred expensꦓes.

A statement of comprehensive income, which covers the same period as the income statement, reflects net income as well as 澳洲幸运5官方开奖结果体彩网:other comprehensive income, the latter being unrealized gains and losses on assets that areไn't shown on the income statement. The statement﷽ of comprehensive income gives company management and investors a fuller, more accurate idea of income.

Net Income

The net income section provides information derived from the income statement about a company's total revenues and expenses. The amount is adjusted to account for non-owner activities. Net income is arrived at by subtracting the 澳洲幸运5官方开奖结果体彩网:cost of goods sold (COGS), general expenses, taxes, and iඣntereඣst from total revenue.

Other Comprehensive Income

The other comprehensive income section provides information on the company's unrealized gains, losses, revenue, and expenses. Here are some examples of other comprehensive income that you may find on the comprehensive income statement:

• The unrealized gains and losses on securities that a company has for sale
• Gains and losses on cash flow hedge instruments
• The unrealized gains and losses on that result when they're transferred from the available-for-sale category to the held-to-maturity category
• Foreign currency translation adjustments
• Foreign currency transaction gains and losses related to a foreign investment hedge.
  
• Pension or post-retirement benefit plan gains or losses

At the end of the sta🔴tement is the comprehensive income total, which is the sum of net income and other com𝕴prehensive income.

In some circumstances, companies combine the income statement and statement of comprehensive income, or it will be included as 澳洲幸运5官方开奖结果体彩网:footnotes. However, a company with o𓆏ther comprehensive income will typically file this form separately. The statement of comprehensive income is not required if a company does not meet the criteria to classify income as comprehensive income.

Example of Comprehensive Income

Like other public companies, Ford (F) files quarterly and annual reports with the SEC. In its fourth quarter filing for 2024, it published its consolidated statements of comprehensive income, which combines comprehensive income from all of its activities and subsidiaries. For the first nine months of 2024, Ford reported comprehensive income of roughly $4.11 billion, the majority of which was attributable to the company.

Pros 𒉰and Cons of the Statement of Comprehensi𝔍ve Income

The Bottom Line

Comprehensive income is the sum of a company's net income, as 澳洲幸运5官方开奖结果体彩网:recorded on the income statement, and unrealized income (or other comprehensive income) that is not includ🐭ed on an income statement but is recorded in the statement of comprehensive income.

The statement of comprehensive income displays both net income details and other comprehensive income details. It is appreciated for its more comprehensive view of a company's profitability picture for a particular period.