A statement of income and comprehensive income is a single financial statement that reports both net income and other comprehensive income for a period, with a total for comprehensive income below both sections. It is the one-statement form of a choice set by Topic 220, the FASB codification topic covering comprehensive income, which requires an entity to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-1). Taking the first route produces this statement.
What Sits on the Face of the Statement
Read top to bottom, the statement runs in two sections with one total under them. The net income section comes first, carrying the components that make up net income and a total for it. The other comprehensive income section follows, carrying its own components and its own total. Total comprehensive income follows both sections (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-1A).
Which items belong in the lower section, and whether they are shown net of tax or before tax, is set out in other comprehensive income. The equity balance they accumulate into is AOCI.
Why the Title Reads That Way
The combined caption comes from the standard’s own illustration. Under the heading Format A, Single Continuous Statement, Topic 220 illustrates the statement of income and comprehensive income for the year with the other comprehensive income components shown net of tax effects, and the illustrated statement is captioned Consolidated Statement of Income and Comprehensive Income (FASB Accounting Standards Update 2011-05, paragraph 220-10-55-7).
That wording is not mandatory, which is why the caption varies between one set of financial statements and the next. Topic 220 does not require an entity to use the terms comprehensive income or other comprehensive income in its financial statements (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-4). Elsewhere the standard calls the same thing a single continuous statement of comprehensive income (paragraph 220-10-45-1C). The other names the underlying statement travels under are in income statement.
Where the Statement of Income and Comprehensive Income Lands in a Firm’s Work
For a commercial or industrial client that files with the SEC, the combined shape is what the rule already assumes. Regulation S-X titles that rule Statements of comprehensive income, and its caption list does not stop at net income. It carries on to other comprehensive income and then to comprehensive income (17 CFR 210.5-03). Sections 210.5-01 to 210.5-04 apply to financial statements filed for all persons except registered investment companies, employee stock purchase, savings and similar plans, insurance companies, bank holding companies and banks, and brokers and dealers filing Form X-17A-5 (17 CFR 210.5-01). The caption numbers themselves are in net income.
For a private client the question usually settles earlier. An entity that has no items of other comprehensive income in any period presented is not required to report comprehensive income (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-1A), so nothing goes below net income and the statement stays an income statement.
What It Is Not
It is not the two-statement approach, in which a statement of other comprehensive income is presented immediately after the statement of net income (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-1B). The two formats are set side by side in other comprehensive income. One statement or two is the only difference, because the totals reported are the same either way.
Common Questions
Topic 220 illustrates one. Under the heading Format A, Single Continuous Statement, the illustration runs revenues and expenses down to net income and the share of net income attributable to the noncontrolling interest, shows earnings per share, and only then opens the other comprehensive income section with those components shown net of tax (FASB Accounting Standards Update 2011-05, paragraph 220-10-55-7). How the bottom of such a statement resolves is laid out in other comprehensive income.
The income statement stops at net income. A statement of comprehensive income keeps going, adding the other comprehensive income section and a total for comprehensive income below it (FASB Accounting Standards Update 2011-05, paragraph 220-10-45-1A). Why a real gain can sit outside the bottom line is worked through in net income.
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