Statement of Comprehensive Income

INTERMEDIATE ACCOUNTING 3

CHAPTER 2: STATEMENT OF COMPREHENSIVE INCOME

LEARNING OBJECTIVES

• Prepare a Statement of Profit or Loss and Other Comprehensive Income.

• Give examples of items of other comprehensive income.

• State the acceptable methods of presenting items of income and expenses.

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

• An entity shall present all items of income and expense recognized in a period:

1. In a single statement of profit or loss and other comprehensive income; or

2. in two statements:

(1) A statement displaying the profit or loss section only (separate 'statement of profit or loss'
or 'income statement') and

(2) A second statement beginning with profit or loss and displaying components of other
comprehensive income.

SINGLE STATEMENT

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenues 100
Expenses (80)

Profit or Loss 20

Other comprehensive income 10

Comprehensive income 30

TWO STATEMENT POSITION

STATEMENT OF OTHER COMPREHENSIVE INCOME

Profit or Loss 20

Other comprehensive income 10

Comprehensive income 30
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TOTAL COMPREHENSIVE INCOME

• Total comprehensive income comprises all components of

1. Profit or loss; and

2. Other comprehensive income.

NOT INCLUDED IN THE PROFIT OR LOSS

❑ Correction of Prior Period Error

❑ Change in Accounting Policy

❑ Other Comprehensive Income

❑ Transactions with Owners (Investment, withdrawals, Issuance of Share capital, dividends)

PRESENTATION OF EXPENSES

1. Nature of expense method

2. Function of expense method

• If an entity classifies expenses by function, it shall disclose additional information on the nature of
expenses.

NATURE OF EXPENSE METHOD

Revenue xxx

Other Income xxx

Changes in Inventories of Finished goods and work in progress xxx

Raw Materials and consumables used xxx

Employee Benefit Expense xxx

Depreciation and Amortization Expense xxx

Other Expenses xxx

Total Expenses (xxx)

Profit before Tax xxx

Income Tax Expense (xxx)

Profit after Tax xxx
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FUNCTION OF EXPENSE METHOD

Revenue xxx

Cost of Sales (xxx)

Gross Profit xxx

Other income xxx

Distribution Cost (xxx)

Administrative Expense (xxx)

Finance Costs (xxx)

Profit before Tax xxx

Income Tax Expense (xxx)

Profit after Tax xxx

COST OF SALES STATEMENT

Beginning Inventory xxx

Net Purchases xxx

Total goods available for sales xxx

Ending Inventory (xxx)

Cost of Sale xxx

COST OF GOODS SOLD STATEMENT

Beginning Raw Materials Inventory xxx

Net Raw Materials Purchases xxx

Total Raw Materials Available for Use xxx

Ending Raw Materials Inventory (xxx)

Raw Materials Used xxx

Direct labor xxx

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Factory Overhead xxx

Total Manufacturing Costs xxx

Beginning Work In process xxx

Total Cost of Work in Process xxx

Ending Work in Process (xxx)

Cost Of Goods Manufactured xxx

Beginning Finished Goods xxx

Total Goods Available for Sale xxx

Ending finished Goods xxx

Cost of Goods sold xxx

FORMULAS THAT CAN BE USE:

ACCOUNTS RECEIVABLE TURNOVER  Net Credit Sales Average Accounts Receivable

Average Accounts Receivable

AVERAGE ACCOUNTS RECEIVABLE  A/R Beginning + A/R Ending

2

INVENTORY TURNOVER  Cost of Sales

Average of Inventory

AVERAGE INVENTORY  Inv. Beginning + Inv. Ending

2

EXTRAORDINARY ITEMS

• PAS ' prohibits the presentation of any items of income or expense as extraordinary items in the in the
statement(s) presenting profit or loss and other comprehensive income or in the notes.
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OTHER COMPREHENSIVE INCOME FOR THE PERIOD

a. Changes in revaluation surplus

b. Unrealized gains and losses on investments in FVOCI securities

c. Premeasurements of the net defined benefit liability (asset)

d. Gains and losses arising from translating the financial statements of a foreign operation

e. Effective portion of gains and losses on hedging instruments in a cash flow hedge

• OCI may be presented either

(a) Net of tax or

(b) Gross of tax.

RECLASSIFICATION ADJUSTMENTS

• Reclassification adjustments are amounts reclassified to profit or loss in the current period that were
recognized in other comprehensive income in the current or previous periods.

TYPE OF OTHER COMPREHENSIVE INCOME RECLASSIFICATION ADJUSTMENT?

a. Changes in revaluation surplus NO
b. Premeasurements of the net defined benefit NO
liability (asset)
c. Fair value changes in FVOCI - equity NO
instrument (election) - debt instrument YES
(mandatory
d. Translation differences on foreign operations YES
e. Effective portion of cash flow hedges YES

DISCLOSURE OF DIVIDENDS

• Dividends declared by an entity are disclosed either in the

(a) Notes or

(b) Statement of changes in equity.

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ORDER OF PRESENTATION OF DISCLOSURES IN THE NOTES

1. Statement of compliance with PFRSs;

2. Summary of significant accounting policies applied;

3. Supporting information for items presented in the other financial statements; and

4. Other disclosures.