Comprehensive income for a corporation is the combination of the following amounts which occurred during a specified period of time such as a year, quarter, month, etc.:

  1. Net income or net loss (which is reported on the income statement), plus

  2. Other comprehensive income (if this is present, a statement of comprehensive income must be prepared)

Examples of other comprehensive income include:

  • Unrealized gains/losses on available-for-sale investments

  • Unrealized gains/losses on hedge/derivative financial instruments

  • Foreign currency translation adjustments

  • Unrealized gains/losses on postretirement benefit plans

Basically, comprehensive income consists of all of the revenues, gains, expenses, and losses that caused stockholders' equity to change during the accounting period. (The corporation's sale or purchase of its capital stock and its declaration of dividends are not a component of comprehensive income. The stock transactions and dividends are reported as separate items in the statement of stockholders' equity.)

The amount of other comprehensive income for the period will be added to the accumulated other comprehensive income, which is a separate line within stockholders' equity on the end-of-the-period balance sheet. (The net income or net loss reported on the income statement will be added to retained earnings as usual.)