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Income Statement 6 Defines Comprehensive Research Paper

An example here may be income from an original Rembrandt that one possesses and, occasionally, loans for parties, or income from one's continuing retail business, or income that is still coming in from last month's rental payment even though the original inhabitants have discontinued their lease. This part of the income statement remains unchanged. The only element that SFAS 130 appends is the category of other comprehensive income. 3. Definition of classifications within other comprehensive income

Included in other comprehensive income are times such as unrealized gains and losses on particular debt and equity securities investments, minimum pension liability adjustments, and foreign currency translation adjustments. Examples here include the sale or liquidation of an investment in a foreign entity; or a non-materialized loss on a bank loan.

Other comprehensive items must be adjusted for both amounts currently recorded in the net category and for the same amounts previously recorded in the other comprehensive income statement of an earlier period.

4. Explanation of reclassisfication adjustments.

In order to avoid more than one calculation of a comprehensive income item that had appeared in that same, or an earlier period, adjustments, known as 'reclassisfication adjustments' are made. An example here is gains on investment...

These must be deducted through other comprehensive income of the period in which they are included as net income so as to prevent their dual reconfiguration.
These adjustment notices may be inserted on the face of the financial statement itself in which comprehensive income is reported, or they may be added as notes to the financial statement.

The objective of displaying an adjustment for each component in both comprehensive income and net income is in order to improve the clarity and comparability of financial statements.

When applied to foreign currently translations, adjustments are limited to the translation gains and losses that are realized upon the sale or upon liquidation of an investment in a foreign entity.

FASB, Concept Statement No. 3, Elements of Financial Statements of Business Enterprises. Norwalk, CT: FASB, 2009

FASB, Financial Accounting Series, Exposure Draft, Proposed Statement of Financial Accounting Standards, Reporting Comprehensive Income. Norwalk, CT: FASB, 2009

FASB, Statement of Financial Accounting Standards, No. 130, Reporting Comprehensive Income. Norwalk, CT: FASB, 2009

Sources used in this document:
FASB, Concept Statement No. 3, Elements of Financial Statements of Business Enterprises. Norwalk, CT: FASB, 2009

FASB, Financial Accounting Series, Exposure Draft, Proposed Statement of Financial Accounting Standards, Reporting Comprehensive Income. Norwalk, CT: FASB, 2009

FASB, Statement of Financial Accounting Standards, No. 130, Reporting Comprehensive Income. Norwalk, CT: FASB, 2009
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