Statement of

Comprehensive
Income
Intended Learning Outcomes
Ø Describe the elements of the statement of comprehensive
income for a service business and a merchandising business
Ø Prepare a statement of comprehensive income using single-
step approach
Ø Prepare a statement of comprehensive income using multistep
approach
Ø Income Statement is a formal statement showing the financial
performance of an entity for a given period of time.

Ø The financial performance of an entity is primarily measured in terms

of the level of income earned by the entity through the effective and
efficient utilization of its resources.

Ø The financial performance is also known as the results of

operations of an entity.

Ø The income statement for a period presents the income, expenses,

gains, losses, and net income or loss recognized during the period.

Ø Information about financial performance is useful in predicting future

performance and ability to generate future cash flows.
 Sources of Income
Components of Expense
• Sale of merchandise
to customers • Cost of Good Sold or
Cost of Sales
• Rendering of services • Distribution Cost or
• Use of entity Selling Expenses
resources • Administrative
• Disposal of resources Expenses
other than products • Other Expenses
• Income Tax Expense
 STEPS OF INCOME STATEMENT
Single-step Income Statement
In a single step income statement
there is a single subtraction in the
whole statement as all the
incomes/gains/revenues are added
together to calculate total income.
On the other hand all
expenses/losses are added up
together to calculate total expenses.
In the end, total expenses are
subtracted from total income to
determine profit.
Multi-step Income Statement
Entities with different accounting
frameworks use this method to
prepare income statement. As stated
earlier, in multi-step format there are
multiple subtotals in the income
statement. This format coupled with
functional basis of classification of
expenses is the best available format
to report income and expenses of the
entity in particular period.
 Statement of
SINGLE-STEP of Comprehensive Income
Income Statement Estanilla Enterprises
Statement of Comprehensive Income
Estanilla Enterprises
For the Year Ended December 31, 2021
Income Statement
For the Year Ended December 31, 2021
Revenue P 950,000
Revenue P 950,000 Other Income _ 25,000
Other Income __ 25,000 Gross Income P 975,000
Gross Income P 975,000 Less: Expenses
Less: Expenses Salaries Expense 345,000
Salaries Expense 345,000 Supplies Expenses 165,000
Supplies Expenses 165,000 Rent Expense 120,000
Rent Expense 120,000 Utilities Expense 75,000
Utilities Expense 75,000 Other Charges 12,500 717,500
Other Charges 12,500 717,500 Net Income P 257,000
Net Income Other Comprehensive Income
P 257,000 Unrealized Gain on equity Investment P 35,000
Unrealized loss on debt instrument ( 5,000)
Total Comprehensive Income P 287,000
Our
company
Mercury is the closest planet to the
Sun and the smallest one in the
Solar System—it’s only a bit larger
than the Moon
 Cost of Good Sold of Merchandising Cost of Good Sold of Manufacturing

Beginning Inventory 500,000 Beginning Materials 500,000

Add: Net Purchases *2,000,00 Net Purchases 2,000,000
Good Available for sale 2,500,000 Raw Materials Available for use 2,500,000
Less: Ending Inventory (300,000) Ending Raw Materials (300,000)
Cost of Goods Sold 2,200,000 Raw Materials Used 2,200,00
========
========
Gross Purchases 1,900,000
Freight In 150,000 Direct Labor 3,000,000
Total 2,050,000 Factory Overhead 1,300,000
Less: Purchase Returns & Allow. (40,000) Total Manufacturing cost 6,500,000
Purchase discounts (10,000) Beginning goods in process 900,000
Net Purchases 2,000,000 Total Cost of Goods in Process 7,400,000
====== Ending goods in process (1,000,000)
Cost of Goods Manufactured 6,400,000
Gross sales 500,000 Beginning Finished Goods 1,600,000
Less: Sales returns and Allowances (11,000) Goods Available for sale 8,000,000
Sales discount (4,000) Ending Finished Goods (1,500,000)
Net sales 485,00.
Cost Of Goods Sold 6,500,000
=======
========
 FORMS OF
INCOME STATEMENT
Functional Presentation
• This forms classifies expenses according to
their function as part of cost of goods
sold, distribution cost, administrative
expenses and other expenses.
• The functional presentation is also known
as the cost of goods sold method.
• An entity classifying expenses by functions
shall disclose additional information on
the nature of expenses, including
depreciation, amortization and employee
benefit cost.
Natural Presentation
• Referred to as the nature of expense method.
• Under this form, expenses are aggregated
according to their nature and not allocated
among various functions within the entity.
• In other words, the expenses are no longer
classified as cost of goods sold, distribution cost,
administrative expenses and other expenses.
• The expenses which are of the same nature are
grouped or aggregated and presented as one
item.
• For example, depreciation, purchases of raw
materials, transport costs, employee benefit
costs and advertising costs are presented
separately.
Functional Income Statement Natural Income Statement
Maestro Company
Income Statement
Maestro Company December 31, 2018
Income Statement
December 31, 2018 Note
Note Net Sales (1) 9,000,000
Other Income (2) 900,000
Investment income (3) 500,000__
Net Sales (1) 9,000,000 Total Income 10,400,000
Cost of Goods Sold (2) (5,400,000) Expenses:
Gross Income 3,600,000 Increase in inventory (4) (500,000)
Other income (3) 900,000 Net Purchases (5) 5,900,000
Investment Income (4) 500,000_ Employee benefit costs (6) 1,400,000
Sales Commissions 180,000
Total Income 5,000,000 Advertising 100,000
Supplies Expense (7) 120,000
Expenses: Delivery Expense 250,000
Distribution costs (5) 1,350,000 Depreciation (8) 240,000
Taxes and License 20,000
Administrative Expenses (6) 1,000,000 Doubtful Accounts 40,000
Other Expenses (7) 320,000 Other Expenses (9) 320,000
Financial Cost (8) 200,000 2,870,000 Finance Cost (10) 200,000 8,270,000
Income Before Tax 2,130,000 Income before tax 2,130,000
Income Tax Expense 580,000 Income tax expense 580,000
Net Income 1,550,000
Net Income 1,550,000 =======
=======
Ø Comprehensive income is the change in equity during a period
resulting from the transactions and other events, other than
changes resulting from transactions with owners in their capacity as
owners.
v Accordingly, comprehensive income includes:
Components of Profit or Loss
Components of other comprehensive Income
Profit or Loss

• The term ”profit or loss” is the total of income less expenses, excluding the
components of other comprehensive income
• In other words, this is the “ bottom line” in the traditional income statement.
• An entity may use “ net income or net loss” to describe profit or loss.
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