Other Comprehensive Income: Overview | Example | Explanation


Other comprehensive income as defined by IFRS comprises items of income and expense (including items that may not and will not reclassify into income statement) that are not allowed to recognize in profit or loss.

Currently, Statement of Profit or Loss and Other Comprehensive Income is allowed by IFRS to be presented in two formats.

The entity could present it in the form of a Single Statement of Comprehensive Income or Two Statements of Profit or Loss and Other Comprehensive Income. These two statements are different.

The following are the list of or the items that are normally classified in Other comprehensive income These items include not only temporary gain but also a temporary loss that normally not because of the business performance.

For example, gain or loss on property valuation is basically not based on business performance. But it is based on the market value of assets and the valuation value or method might be influenced by the management of the entity.

The Items to be Presented in Other Comprehensive Income:

  • Changes in revaluation surplus under IAS 16 Property, Plant and Equipment, and IAS 38 Intangible Assets. For example, the revaluation surplus of assets USD1,000 should not records as the gain in the profit or loss section, but it should be recognized in Other Comprehensive Income. This surplus will be reclassified into profit or loss when it became to realize the gain.
  • Gains or Losses arising from re-measurements of defined benefit plans under IAS 19 Employee Benefits.
  • Gains and losses arising from translating the financial statements of a foreign operation under IAS 21 The Effects of Changes in Foreign Exchange Rates.
  • Gains and losses on re-measuring available-for-sale Financial Assets under IAS 39 Financial Instruments: Recognition and Measurement. For example, gains or losses from re-measuring of available for sales securities.
  • The effective portion of gains and losses on hedging instruments in a cash flow hedge under IAS 39.
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The Further of Other Comprehensive Income:

IASB‘s last changing of Other Comprehensive Income since 2011, and there is the uncertainty of how the Other Comprehensive Income could be in the future.

All items that are not allowed to be recorded under the profit or loss section are records under Other Comprehensive Income. But, some of those items may be further are reclassified or recycled into profit loss.

However, some items will not be classified as Profit or Loss. In the future, maybe IABS proposes to present items in Other Comprehensive Income into two sections.

First, the items that may be classified into Profit or Loss, and Second are the items that will not be classified into Profit or Loss.

Other Comprehensive Income In Balance Sheet

In the balance sheet, other comprehensive income is shown as the accumulated balance and it is effected the total shareholder equity in the same way as accumulated losses or retained earning. And it is also reported in the statement of change in equity in the same way as retained earning.