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Comprehensive Income and Other Comprehensive Income

In: Business and Management

Submitted By hjt12345
Words 454
Pages 2
Haydee Tejada
February 13, 2011
Case 2 a. Define Comprehensive and Other Comprehensive Income. b. Discuss alternative formats for reporting comprehensive income. c. Explain the usefulness of reporting the components of comprehensive income.
Section 220 of the FASB codification discusses comprehensive income and all that’s included when reporting. Comprehensive income is the change in equity of a business during a period from transactions and other events and circumstances from nonowner sources. Comprehensive income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners (FASB ASC 220-10-10-1). Other comprehensive income are the revenues, expenses, gains, and losses that under GAAP are included in comprehensive but excluded from net income (FASB ASC 220-10-15-3).
When reporting comprehensive income, it should be presented in two sections, net income and other comprehensive income. The financial statement should show the total amount for net income together with the components that make up net income, the total amount for other comprehensive income together with the components that make up other comprehensive income, and total comprehensive income (FASB ASC 220-10-45-1A). Some items of other comprehensive income includes foreign currency translation adjustments, gains and losses on foreign currency transactions that are designated as economic hedges of a net investment in a foreign entity, gains and losses on derivative instruments that are designated as cash flow hedges, and unrealized holding gains and losses on available for sale securities (FASB ASB 220-10-45-10A). One format shows other comprehensive income components shown net of tax effects. Alternatively, components of other comprehensive income could be presented before tax with one amount shown for the aggregate income tax…...

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