Other comprehensive income is those expenses, revenues, profits and losses that are excluded from the net income of the business on the income statement of that accounting period. The concept of other comprehensive income is accepted by GAAP and international financial reporting standards of accounting. The other comprehensive income is recorded over the income statement after recording the net income on the income statement.
The revenues, expenses, losses and profit are entered as comprehensive income when they are not yet realized as an income. The actual income is realized and tagged as the net income when the actual transaction is completed for example when a certain investment is sold. The example of other comprehensive income is that suppose your company has invested in bonds and the value of the bond invested by your company changes in the market. The difference in the values of bonds as a gain or loss is recorded as other comprehensive income.
Other examples that can be categorized as other comprehensive income are the unrealized holding gains or losses on the investments that are tagged by the business as available for sale. Gain or loss that occurred due to foreign currency exchange, gain or loss associated with pension plan and pension prior service costs or credits. Other comprehensive income gives a complete financial view of a company’s financial status.
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