STATEMENT OF

COMPREHENSIVE INCOME
Statement of Comprehensive Income

• It presents the financial performance of an entity for a given reporting

period.
• It presents two elements:
• Income
• Expenses
• Two sections presented in the statement of financial performance:
• The profit or loss section ( which is the conventional income statement)
• The other comprehensive income
 Statement of Comprehensive Income

• Forms of Presenting the Statement of Comprehensive Income:

1. One statement form that included both the profit or loss and the other
comprehensive income; or
2. Two-statement format: one statement for the profit or loss and another
statement for the comprehensive income which includes the profit or loss in the
first statement and other comprehensive income.
• The expenses in the profit or loss section of the income statement may
be presented using either of the two methods:
3. The function of expense method
4. Nature of expense method
Statement of Comprehensive Income

• Function of expense method – Under this method, expenses are classified

under cost of goods sold, selling or marketing expenses and
administrative expenses and other operating expenses.

• Nature of expense method – Under this method, there is no need to

classify the expenses by function. Expenses are presented based on their
account names in the general ledger.
 Presentation of Expenses

IAS 1 requires an entity to present an analysis of expenses in profit or loss section of the
statement of comprehensive income using a classification based on either :
• The nature of expenses or
• The function of expenses within the entity
• Nature of Expense Method – presents expenses based on nature, shows expenses as
purchases, salaries and wages, depreciation, utilities and other operating expenses.
There is no need to re-allocate expenses based on their function to the entity.
 Presentation of Expenses

• Function of Expense Method – is also referred as the cost of sales

method. Under this presentation, expenses are classified according to
their function in the enterprise operations. Expenses are classified as:
a. Cost of Sales
b. Distribution or selling expenses
c. General or administrative expenses
d. Other expenses
• The function of expense method provides more relevant information to users than
the classification of expenses by nature, but the allocation of costs to functions
can be arbitrary and involves considerable judgment (paragraph 103, IAS 1).
Finance Costs – should be presented as a separate line item in the profit
or loss regardless of the method of presenting the expenses in the
statement of comprehensive income. (e.g. interest expense (paid and
 The Other Comprehensive Income

• The Revised IAS 1 broadens the information presented for the financial performance of an entity. The
conventional income statement, which shows only the profit for the period, has been expanded into a
statement of comprehensive income.
• Items that meet the definition of income and expenses but are excluded from profit or loss are called
other comprehensive income. The components include (par.7, IAS 1):

1. Changes in revaluation surplus 4. Unrealized gains and losses during the

2. Actuarial gains and losses on defined
benefit plans
3. Gains and losses from translation of
financial statements of foreign operations
period from FVOCI investments
5. The effective portion of gains and losses
on hedging instruments in a cash flow
hedge.
Statement of Comprehensive Income

• Earnings Per Share – the amount of earnings for a period attributable to

each ordinary share.
• Basic earnings per share – is computed by dividing the profit attributable
to ordinary shareholders by the weighted average number of ordinary
share capital outstanding during the period.
• If the entity’s capital structure is composed of more than one class of
share capital, the profit which serves as the numerator for the
computation shall be reduced by the preference dividends.
 Statement of Comprehensive Income

• If the preference share is a cumulative, the annual dividend requirement,

whether declared or not, shall be deducted from the profit to arrive at
profit attributable to ordinary shareholders.
• If the preference share is non-cumulative, only the dividend on preference
share that has been declared during the period, shall be deducted from
profit to arrive at profit attributable to ordinary share.
 Statement of Comprehensive Income
• Proforma in the Computation of Basic Earnings Per Share:
1. If there is only one class of stock: Basic EPS = Net Income/Weighted Average
Outstanding Shares
2. If there are 2 classes of shares of stocks:
Net Income - XXX
Less: PS dividends XXX
Adjusted Net Income to OS XXX

Basic EPS = Net Income/ Weighted Average Outstanding Shares

Note: If the PS is cumulative, with or without declaration by the Board, PS dividend

for the current year is deducted. However, if it is non-cumulative
PS dividends for the current year will only be deducted when there is declaration
by the Board to pay dividends.