HOME

TheInfoList



OR:

In company financial reporting in the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, comprehensive Income (or comprehensive earnings) "includes all changes in equity during a period except those resulting from investments by owners and distributions to owners". Because that use excludes the effects of changing ownership interest, an economic measure of comprehensive income is necessary for financial analysis from the shareholders' point of view (all changes in equity except those resulting from investment by or distribution to owners).


Accounting

Comprehensive income is defined by the
Financial Accounting Standards Board The Financial Accounting Standards Board (FASB) is a private standard-setting body whose primary purpose is to establish and improve Generally Accepted Accounting Principles (GAAP) within the United States in the public's interest. The Securi ...
, or FASB, as “the change in equity et assetsof a business enterprise during a period from transactions and other events and circumstances from non-owner 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 In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest ...
and other items that must bypass the
income statement An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''stateme ...
because they have not been realized, including items like an unrealized holding gain or loss from
available for sale Available for sale (AFS) is an accounting term used to classify financial assets. AFS is one of the three general classifications, along with held for trading and held to maturity, under U.S. Generally Accepted Accounting Principles (US GAAP), spe ...
securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...
and foreign
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...
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 Note: Reference cited below, FAS130, remains the most current accounting literature in the United States on this topic. In 1997 the United States Financial Accounting Standards Board issued Statement on Financial Accounting Standards No. 130 ent ...
section of
shareholder's equity In finance, equity is ownership of assets that may have debts or other liabilities attached to them. Equity is measured for accounting purposes by subtracting liabilities from the value of the assets. For example, if someone owns a car worth $2 ...
.


Financial analysis

Comprehensive income 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: dividend payments, share buy-backs, and share issues at market value. It is calculated by reconciling 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.How to measure comprehensive income.
/ref> Income Comprehensive definition: "income is increases in economic benefits in form of inflows or encashment of assets or decrease in liabilities that result is increase in capital(owners equity) is called income". Shareholders' Equity, beg. of period (per share) - Dividends paid (per share) + Shares issued (premium over book value per share) - Share buy-backs (premium over book value per share) + Comprehensive Income (per share) ------------------------------------------ = Shareholders' Equity, end of period (per share)


See also

*
Accumulated other comprehensive income Note: Reference cited below, FAS130, remains the most current accounting literature in the United States on this topic. In 1997 the United States Financial Accounting Standards Board issued Statement on Financial Accounting Standards No. 130 ent ...
*
Income statement An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''stateme ...
*
International Financial Reporting Standards International Financial Reporting Standards, commonly called IFRS, are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB). They constitute a standardised way of describing the company's f ...
*
Net income In business and accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and amortization, interest ...
*
Statement of changes in equity A statement of changes in equity and similarly the statement of changes in owner's equity for a sole trader, statement of changes in partners' equity for a partnership, statement of changes in shareholders' equity for a company or statement of cha ...
*
Statement of comprehensive income An income statement or profit and loss accountProfessional English in Use - Finance, Cambridge University Press, p. 10 (also referred to as a ''profit and loss statement'' (P&L), ''statement of profit or loss'', ''revenue statement'', ''stateme ...
*
U.S. Generally Accepted Accounting Principles Generally Accepted Accounting Principles (GAAP or U.S. GAAP, pronounced like "gap") is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC) and is the default accounting standard used by companies based in the Unit ...


References

{{Reflist Income statement United States Generally Accepted Accounting Principles