Question

Which of the following are acceptable formats for reporting comprehensive income?

I. In one continuous financial statement
II. In a statement of changes in equity
III. In a separate statement of net income
IV. In two separate but consecutive financial statements

Answer 1

Comprehensive income can be reported either in one continuous financial statement combining the income statement and comprehensive income, or in two separate but consecutive financial statements. The statement of changes in equity is not a format for comprehensive income, and a separate statement of net income does not represent it fully.

Step-by-step explanation:

The acceptable formats for reporting comprehensive income are:

In one continuous financial statement, which combines the income statement and comprehensive income.

In two separate but consecutive financial statements, where the first is the income statement, followed by a statement of comprehensive income which starts with net income.

Option II, 'in a statement of changes in equity,' is not a format for the comprehensive income statement itself but can include the information. Option III, 'in a separate statement of net income,' is incorrect because while the statement of net income is part of comprehensive income, it does not represent the comprehensive income in its entirety.

Answer 2

The acceptable format for reporting comprehensive income are 1. In one continuous financial statement and 4. In two separat but consecutive financial statements.

If a firm that presents a full set of financial statements has items of other comprehensive income it must present comprehensive income either (1) in a single continuous statement of comprehensive income or (2) in two separate but consecutive statements.