What Is Other Comprehensive Income? (With Example)

A companys statement of profit and loss, also known as its income statement, has its drawbacks. For the most part, the statement accurately reflects a companys past profitability and earnings growth—one of the primary determinants of a firms stock performance—but it remains a subjective measure, open to manipulation. In particular, companies have a fair amount of latitude on the timing and impact of the quarterly and annual charges and other expenses reported on the statement.

How a firm generates revenues and turns them into earnings is an important factor, but there are other important considerations. The Financial Accounting Standards Board (FASB) has continued to emphasize a financial measure called other comprehensive income (OCI) as a valuable financial analysis tool. The FASBs stated goal, in general, is to issue guidance “to improve the comparability, consistency, and transparency of financial reporting.” To accomplish this, it has sought to “increase the prominence of items reported in other comprehensive income.”

Other Comprehensive Income

Accumulated other comprehensive income vs. realized income

Accumulated other comprehensive income differs from realized income in a few key ways. Some of these differences include:

Location on the financial statement

Financial statements often follow the same layout to ensure that each person who views the report clearly understands what theyre analyzing. Realized income directly impacts the net income of a company, so its always listed on the balance sheet. However, OCI is only listed on a balance sheet to provide a more detailed explanation of what gains and losses to expect in the future. When a company decided to include it, they list OCI as a line item in the equity section of the report.


Realized income refers to any income that a company has both earned and received in its accounts. This might include wages, income from accrued interest and other sources of income for a business. The purpose of realized income is to demonstrate the completed transactions that impact the companys net income.

The purpose of OCI is to measure the companys value in a unique way by showing a broader view of the overall net income. OCI refers to uncompleted, or unrealized, transactions, which reflects the balance between the net income and comprehensive income of a company. OCI may become realized income over time, which may contribute to a companys reasoning for adding it to the financial statement.


When included in a financial statement, realized income helps analysts understand the current state of a companys financial status. By listing all the completed transactions within a company, the financial statement can demonstrate the spending and earning patterns of the business. Realized income may help a company forecast or make important financial decisions by accurately communicating the active state of the companys accounts.

Other comprehensive income serves to increase knowledge about potential losses and gains that a company expects to occur. It may provide potential and current investors with information about the value of a company if it sold its assets and those gains became realized income. Listing OCI on a financial statement can help stakeholders better understand why a companys net income may vary in the coming weeks or months, as OCI becomes realized income over time.

What is accumulated other comprehensive income?

Accumulated other comprehensive income, or OCI, is a financial analysis tool that refers to gains or losses expected to impact a company or individuals balance sheet. These gains and losses impact the net income of a company, but typically, a company chooses not to report this impact on an income sheet. OCI doesnt change the overall earnings of an organization, so professionals list these transactions after net income on a financial statement. Including OCI on a financial statement may help analysts understand the complete financial status of the company by improving the consistency and transparency of the reports.

Types of accumulated other comprehensive income

Accumulated other comprehensive income includes a variety of income accrued by a company. A companys OCI may include a variety of expenses, gains, losses or revenue. Some common types of accumulated other comprehensive income include:

Foreign currency transactions

If your company deals in several different currencies, the balance of your accounts may fluctuate as foreign currency changes value. Additionally, the rate of exchange for particular currencies may impact a companys holdings. For example, imagine a company based in the United States primarily deals in the United Kingdom. When they receive payments from clients in the UK, they pay in British pounds (GBP). Its necessary for the US company to exchange the GBP for US dollars, which usually involves an exchange rate between one and two percent. The company includes this fluctuation on their income statement as an OCI.

Pension plans

When a company pays employees a pension, these post-retirement benefits may involve unrealized gains and losses. While each pension plan varies, a company may see either an increase or decrease in its liability for pensions based on the funds invested. The amount of impact pension plans have on a companys OCI depends on the type of plan the company uses and the employees average contribution.


Another type of OCI may include investments with unrealized gains or losses. Typically these OCI investments are available for sale. If the value of an investment increases, the companys OCI also increases. If the company sells, the OCI becomes a realized gain. Including these investments in a financial statement may help a company show potential stakeholders the value of the business investments.

Example of accumulated other comprehensive income

Heres an example of a company with accumulated other comprehensive income:

Blue Water Limited bought 150 shares of common stock at $15 per share. After holding the investment for five years, its now worth $50 per share. However, Blue Water Ltd. hasnt sold the shares yet, so the company classifies the potential gain from this investment as unrealized. The financial analysts run the quarterly financial report and include a section with the companys accumulated other comprehensive income.

In this section, they list other OCI, such as the loss from foreign currency exchange from their new client in Spain. They also list unrealized investments. Since the common stocks worth increased by $35 per share, the total unrealized gain is $5,250. The company lists the total under the “Equity” section of the financial report so Blue Waters stakeholders can see the value of the companys investments.


What is other comprehensive income example?

Examples of Other Comprehensive Income

Unrealized holding gains or holding losses on investments that are classified as available for sale. Foreign currency translation gains or losses. Pension plan gains or losses. Pension prior service costs or credits.

What is meant by comprehensive income?

Comprehensive income includes net income and unrealized income, such as unrealized gains or losses on hedge/derivative financial instruments and foreign currency transaction gains or losses. It provides a holistic view of a company’s income not fully captured on the income statement.

What is the difference between other income and other comprehensive income?

Overseas Citizenship of India (OCI) is a form of permanent residency available to people of Indian origin and their spouses which allows them to live and work in India indefinitely. Despite the name, OCI status is not citizenship and does not grant the right to vote in Indian elections or hold public office.

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