Comprehensive income is defined as being the total nonowner change in equity dur

Question

Comprehensive income is defined as being the total nonowner change in equity during a specific period. Totalcomprehensive income includes net income combined with othercomprehensive income (OCI). OCI items wouldpreviously bypass all financial statements and gatherdirectly into equity, but are now required to be reported in areadily available and prominent financial statement.

List some examples of other comprehensive incomeitems. Does the reporting of other comprehensive incomeaffect the determination of net income and retainedearnings?

Explanation / Answer

Other comprehensive income is simply the difference between Totalcomprehensive income and net income. It represents the gainsand losses of the company (rather than the revenue and expensesincluded in net income). The following are some items in other comprehensive income: Unrealized Gains and losses on available for sale securities Gains and losses resulting from currency changes Gains and losses on derivative securities held as cash flowhedges Other comprehensive income is reported separately from retainedearnings and it does not contribute to net income. Therefore,it has no effect on either of these measures.

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