The Statement of Comprehensive Income first made its appearance on the accounting scene in 1998. It can be presented as a independent statement of its own, as part of the statement of stockholders’ equity, or as an addendum to the income statement itself. Regardless of its format, the Statement of Comprehensive Income holds the same basic information across the board from company to company.
The purpose of the Statement of Comprehensive Income is to recognize the net change in owners’ equity during the year from the company’s transactions and events that did not involve the owners themselves.
Items Included in the Statement of Comprehensive Income
- Net income
- Adjustments of assets and liabilities that don’t influence the current period’s net income
Examples include the adjustment to market value for available sale securities, certain types of derivatives, and foreign currency translation adjustments.
Items Excluded from the Statement of Comprehensive Income
- Payment of dividends
- Issuance of stock
- Repurchase of stock
The main crux of the Statement of Comprehensive Income is it involves all value changes recorded through the year from transactions and events not involving the company’s owners. This statement is a valuable piece to analyze from a shareholder’s perspective.
Comprehensive income is calculated on a per-share basis. The accountant reconciles the book value per-share from the beginning of the period to the end of the period. Next, all other line items are calculated. The amount of comprehensive earnings is the result.