Differences between Income Statement and Statement of Comprehensive Income

Income Statement and Statement of Comprehensive are differentiated because IAS 1 gives two options to present the items of incomes and expenses recognized during the period.

IAS 1 para 81 allows that all the items of income and expenses recognized in the period:

EITHER in a single statement i.e. Statement of Comprehensive Income;

OR in two separate statements as follows:

• Income Statement: With components of profit and loss recognized. This statement includes regular line items which in the language of IASs are known as profit and loss items.

• Statement of other Comprehensive Income: This statement starts with the profit or loss as calculated under Income statement and contains components of other comprehensive income. Simply this statement contains such line items which are not recognized in profit or loss and if disclosed under Income Statement then it might mislead users of financial statements as they may consider them as regular line items.

The components of other comprehensive income include:

1. changes in revaluation surplus (see IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets);
2. actuarial gains and losses on defined benefit plans
3. gains and losses arising from translating the financial statements of a foreign operation
4. gains and losses from investments in equity instruments measured at fair value through other comprehensive income
5. the effective portion of gains and losses on hedging instruments in a cash flow hedge (see IAS  39).