Q36Q - Intermediate Accounting (Kieso)

Question

Question:  What are the two ways that other comprehensive income may be displayed (reported)?

Step-by-Step Solution

Answer

The other comprehensive income can be displayed by using the following approaches:

• Single statement approach

• Two statements approach

Step 1: Meaning of Other Comprehensive Income

Other comprehensive income is excluded from the net income determined in the income statement because it consists of the revenues, gains, losses, and expenses that are not realized yet by the business entity. 

Step 2: Explanation of single statement and two statement approaches

In the single statement approach, the other comprehensive income is shown in a combined manner with the net income obtained by a business concern.

In comparison, the two statement approach prepares two statements. The first one computes net income, and the second statement adjusts the net income with the other comprehensive income.