The Statement of Comprehensive Income is a primary financial statement that provides an overview of a company's financial performance during a specific period, showcasing both net income and items of other comprehensive income that affect shareholders’ equity but not retained earnings.
The statement typically includes net income, derived from the income statement, which is the result of revenues minus expenses. Additional components can include unrealized gains or losses on securities classified as available for sale, adjustments for foreign currency translations, and changes in revaluation reserves. By encapsulating other comprehensive income, this statement offers a broader perspective of financial activities than the income statement.
For example, the statement might show a net income of $100,000 for the quarter but also highlight a $10,000 loss on foreign currency translation as part of other comprehensive income. Thus, the total comprehensive income is $90,000. Businesses use this statement to comply with financial reporting standards like IFRS and provide stakeholders with enhanced transparency.