Definition of Comprehensive Income
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.:
- Net income or net loss (the details of which are reported on the corporation’s income statement), plus
- Other comprehensive income (if any)
Examples of other comprehensive income include:
- Unrealized gains/losses on hedging derivatives
- 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 amount of net income for the period is added to retained earnings, while the amount of other comprehensive income is added to accumulated other comprehensive income. Retained earnings and accumulated other comprehensive income are reported on separate lines within stockholders’ equity on the end-of-the-period balance sheet.
