Other Comprehensive Income

OTHER COMPREHENSIVE INCOME

FROM A PAST, PRESENT, AND FUTURE PERSPECTIVE

BY

DAWN EVANS, TODD PIERCE, AND JONATHON VALEZ

NOVEMBER 2011

OTHER COMPREHENSIVE INCOME—PAPER AND PRESENTATION OUTLINE

I. Introduction

II. Definition of Comprehensive Income

III. Definition of Other Comprehensive Income

A. Available for Sale Securities

B. Derivatives Instruments and Hedging Activities

C. Foreign Currency Translations

D. Gains/Losses from Defined Benefit Plans

E. Pension Plan Service Costs or Credits

IV. Presentation of Comprehensive Income

A. Historical

B. Present-GAAP

C. Present-IFRS

D. Future

VI. Conclusion

I. INTRODUCTION

The subject of Other Comprehensive Income is rapidly being advanced in the accounting financial world to keep pace with the changes being made with the FASB Standards and the upcoming integration with the IASB Standards. This paper will provide a background on this topic, starting with the historical beginnings of using this concept in financial statements, examining how it is currently presented, and predicting the eventual outcome in the upcoming future standards that are expected to be finalized in 2012.

II. DEFINITION OF COMPREHENSIVE INCOME

Comprehensive Income has been defined by FASB as “the change of equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.” Comprehensive Income includes net income plus other unrealized gains or losses that are not yet recognized as income on the financial statements and is reported as a section of the shareholder’s equity.

III. DEFINITION OF OTHER COMPREHENSIVE INCOME

Other Comprehensive Income (OCI) is the difference between comprehensive income and net income. Historically, there has been a...