Characteristics of Statement of Comprehensive Income

Characteristics of Statement of Comprehensive Income

In this article we would discuss some important characteristics of Statement of comprehensive income. This statement is divided into two parts or sections. First part shows the statement of comprehensive income contains revenue & expenses and net income, while second section statement of other comprehensive income shows the financial items which are directly charged to equity.

Important Characteristics of Statement of Comprehensive Income

Some important characteristics of statement of comprehensive income have been briefly explained below;

1.   Comprehensive Income Statement Items:

Statement of comprehensive income shows the revenue & expenses and net income or profit. Thus we can say that this part/section reflect the income from the operations. Typically the following items will appear on the face of comprehensive income.

a.    Revenue

b.    Finance Cost

c.    Tax expense

d.    Profit & loss

2.   Other Comprehensive Income Items:

Other comprehensive income section reflects/shows other income, which did not arise from the normal course of activities. Some important item appear in this section are listed below

a)    Gain/loss from foreign currency translation.

b)   Changes in fair value of available for sale asset.

c)    Revaluation of Assets.

d)   Loss/Gain from changes in fair value of financial instruments.

3.   Total Comprehensive Income

Total comprehensive incomes are calculated by adding the income from operations and other comprehensive income. Items appear on the face of comprehensive income are under

e.    Revenue

f.     Finance Cost

g.    Tax expense

h.    Profit & loss

i.     Each item of other comprehensive income.

j.     Total comprehensive income.

4.   Items on Face of comprehensive Income or Notes

Following items are to be shown either on face or in notes

a)    Material item of expense & income.

b)   Expenses analyses either by nature or function.

Nature analyses of Expenses

a)    Material cost.

b)   Labor cost.

c)    Depreciation cost.

Function analyses of Expenses

a)    Distribution cost.

b)   Selling cost.

c)    Finance Cost.

5.    Performance for the Period

Statement of comprehensive income shows the performance for the period. These periods may be yearly, quarterly. It is important to remember that Statutory accounts are prepared annually; however, management may also prepare monthly account.