Comprehensive Income
Comprehensive income extensively chronicles a company's change in equity during a financial period that is not derived from transactions with shareholders (such as dividends or share buybacks).
It supplements the traditional income statement figures, which account for revenues, expenses, gains, and losses, by capturing items that are not included in net income. This includes but is not limited to unrealized gains/losses on available-for-sale securities, foreign currency translation adjustments, and certain pension plan gains/losses.
It may be displayed as a separate component of shareholder equity on the balance sheet, providing a more inclusive representation of the total return on investment. It thus offers investors and stakeholders a broader understanding of all factors that affect a company's financial position and valuation beyond regular business operations. Recognizing comprehensive income ensures that financial statements adhere to the entire accrual principle, presenting all effects of transactions and other events on a company's financial health.
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