The Statement requires the following:
Comprehensive income. All components of comprehensive income must be presented in the financial statements in the period in which they are recognized segregated as follows:
Net income $XX
Other comprehensive income:
Certain foreign exchange transactions XX
Certain derivative transactions XX
Certain transactions involving available-for-sale
securities XX
Total comprehensive income $XX
Presentation. An entity with other comprehensive income items must report compre-hensive income either in:
• A single continuous statement of income and comprehensive income
• Two separate but consecutive financial statements consisting of:
- Statement of income, followed by a - Statement of comprehensive income
Regardless of whether a single or two financial statements approach is used, all items that meet the definition of comprehensive income shall be presented for the period in which those items are recognized. An entity reporting a single continuous financial statement (statement of income and comprehensive income) shall present the following components in two sections; net income and other comprehensive income:
• A total amount for net income together with the components that make up net income (e.g., revenue, expenses, etc.)
• A total amount for other comprehensive income together with the components that make up other comprehensive income
• Total comprehensive income
An entity reporting comprehensive income in two separate but consecutive statements shall present the following:
In the statement of income:
• Components of and the total for net income in the statement of net income In the statement of comprehensive income:
• Components of and the total for other comprehensive income
• Total comprehensive income
NOTE: If two separate statements are presented, the statement of comprehen-sive income shall be presented immediately after the statement of income. More-over, the statement of comprehensive income may (but is not required to) start with net income.
The terms “comprehensive income or “other comprehensive income do not have to be used in the financial statements even though they are used throughout ASC 220.
If an entity has an outstanding noncontrolling interest, the following must be presented in the financial statements in which net income and comprehensive income are presented:
• Amounts for both net income and comprehensive income attributable to the parent
• Amounts for net income and comprehensive income attributable to the noncon-trolling interest in a less-than-wholly owned subsidiary
• Consolidated net income and comprehensive income
Tax effect of other comprehensive income items. An entity shall present compo-nents of other comprehensive income in the statement in which other comprehensive income is reported either:
• Net of tax effects
• Before the tax effects with one amount shown for the total income tax expense allocated to total other comprehensive income
An entity shall present the amount of income tax expense (or benefit) allocated to each component of other comprehensive income, including reclassification adjustments, either in the statement in which those components are presented, or disclose it in the notes to financial statements.
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MODULE 2 - CHAPTER 5 - Comprehensive Income (ASC 220)
NOTE: In lieu of disclosing in the notes the income tax expense allocated to each component of other comprehensive income, that information can be presented parenthetically for each component of other comprehensive income in the statement in which other comprehensive income is presented.
Balance sheet and statement of equity. The total of other comprehensive income must be presented as a separate component in the equity section of the balance sheet under a caption similar to accumulated other comprehensive income.
Accumulated other comprehensive income shall be presented separately from retained earnings and additional paid-in capital in the equity section of the balance sheet at the end of the accounting period. An entity shall present on the face of the financial statements or disclosure in the notes the changes in the accumulated balance for each component of accumulated other comprehensive income. The components must corre-spond to those used in the presentation of other comprehensive income.
The following example illustrates the options available for presenting comprehen-sive income under ASC 220:
EXAMPLE: Facts. The following financial data applies to XYZ Corporation for the year ended December 31, 20X1.
Revenue $1,000,000
800,000 Expenses
Income from operations 200,000
80,000 Income taxes
Net income 120,000
Retained earnings:
Beginning of year 2,000,000
End of year $2,120,000
Other comprehensive income items:
Unrealized gains on available-for-sale
securities $50,000
(20,000) Income taxes allocated
$30,000 Net gain
Foreign currency translation adjustments $40,000 (16,000) Income taxes allocated
$24,000 Net amount
Format 1: Single Continuous Statement Approach
(Combined Statement of Income and Comprehensive Income) XYZ Corporation Statement of Income and Comprehensive Income For The Year Ended December 31, 20X1
Revenue $1,000,000
800,000 Expenses
Income from operations 200,000
80,000 Income taxes
Net income 120,000
Other comprehensive income:
Unrealized gain on securities available for sale (net of tax of $20,000) 30,000 24,000 Foreign currency translation adjustments (net of tax of $16,000)
54,000 Total other comprehensive income
$174,000 Comprehensive income
Alternatively, the tax effect of other comprehensive income could be presented as follows:
Unrealized gain 50,000
Foreign currency
adjustments 40,000
Other comprehensive income,
before taxes 90,000
Income tax expense
allocated (36,000)
Other comprehensive
income 54,000
Format 2: Two-Statement Approach
(Two separate but consecutive financial statements)
• Statement of income, followed by a
• Statement of Comprehensive Income
Separate Statement of Income
XYZ Corporation Statement of Income For The Year Ended December 31, 20X1
Revenue $1,000,000
800,000 Expenses
Income from operations 200,000
80,000 Income taxes
Net income 120,000
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MODULE 2 - CHAPTER 5 - Comprehensive Income (ASC 220)
Separate Statement of Income
XYZ Corporation Statement of Income For The Year Ended December 31, 20X1 2,000,000 Retained earnings:
Beginning of year
$2,120,000 End of year
Separate Statement of Comprehensive Income
XYZ Corporation Statement of Comprehensive Income For The Year Ended December 31, 20X1
Net income $120,000
Other comprehensive income:
Unrealized gain on securities available for sale (net of tax of
$20,000) 30,000
24,000 Foreign currency translation adjustments (net of tax of $16,000)
54,000 Total other comprehensive income
$174,000 Comprehensive income