Can you help me with the differences between Difference between Net Income, Comprehensive Income and Other Comprehensive Income.
Is this correct? Net Income ± comprehensive Income ± Other comprehensive income = ?
Thanks for your help
Net income = Company’s earnings after taxation whereby earnings before taxation is difference between total revenues and total expenses during period (fiscal year)
Accounting statements set is concerned by basic accounting reports such as balance sheet and profit and loss or income statement.
Net income of the year is part of P/L statement but finally also appears in BS in equity position (equity position is part of BS not PL).
Other comprehensive income is GAAP (both USGAAP and IFRS) equity extension for changes on equity which bypass PL and thus such transactions are not concerned in net income of the year. Eg. actuarial gains and losses, revaluation surplus account, net exchange differences from investments to foreign subsidiary, etc.
Total comprehensive income or just comprehensive income is sum of net income of the year (through P/L) and other comprehensive income.
The intention of standard bodies while implementing other (total) comprehensive income to set of mandatory report statements was higher transparency and reducing misreporting issues.
Thanks!
You’re welcome.