What Is a Comprehensive Income Statement?

Comprehensive income refers to all changes in owner's equity except owner's investment and owner's distribution during the accounting period. In other words, comprehensive income includes: (1) income, gains, expenses, and losses reported in net income; (2) gains and losses that are not net income but affect owners' equity. For example, the unrealized gains and losses of available-for-sale financial assets are those that are not net gains but affect owners' equity. These items constitute other comprehensive income, and we usually report them as part of the shareholder equity statement. Alternatively, they can be reported as a separate income statement or as a consolidated income statement. ^[1]

Comprehensive income

Comprehensive income refers to all changes in owner's equity except owner's investment and owner's distribution during the accounting period. In other words, comprehensive income includes: (1) income, gains, expenses, and losses reported in net income; (2) gains and losses that are not net income but affect owners' equity. For example, the unrealized gains and losses of available-for-sale financial assets are those that are not net gains but affect owners' equity. These items constitute other comprehensive income, and we usually report them as part of the shareholder equity statement. Alternatively, they can be reported as a separate income statement or as a consolidated income statement. ^[1]

Comprehensive

In 1776, Adam Smith proposed the concept of income in his "The Wealth of Nations". In 1890, Marshall fixed the concept of income in "Principles of Economics".

because

The FASB-defined comprehensive income and net income are essentially two different performance measures.

(1) Comprehensive income is an economic transformation of traditional accounting income. Comprehensive income covers traditional accounting income. The concept of comprehensive income is undoubtedly closer to the concept of economic income than the traditional concept of accounting income, so it can be said that it is an economic transformation of traditional accounting income. However, no matter how close the comprehensive income is to economic returns, it is difficult to completely equal the ideal economic returns. Because in essence, comprehensive income is a point between traditional accounting income and economic income. When all assets and liabilities are used

1, firm

1. China's current accounting income does not focus on the concept of value-added

In the 21st century, the knowledge economy has developed rapidly. Value-based management has become an indispensable concept of accounting management. The current accounting management concept of enterprises has been updated from the perspective of short-term profit to create long-term value. Investors, to help people clearly understand the value drivers, in order to discover the drivers of value increase and decrease, and make value-based decisions. It should be said that the purpose of the current business operation is no longer just to pursue a single profit, it will necessarily seek the comprehensive interests of all stakeholders involved in corporate activities, including shareholders, employees, lenders, and the government. For this reason, accounting income reflects only traditional business performance It is not enough, and it should also dynamically reflect the benefits of corporate value-added.

2.Recognition and reporting of interest income from related party transactions

As we all know, there is no problem in borrowing funds and signing lending agreements between affiliated companies, but in actual work, affiliated companies often do not sign lending agreements and do not charge any interest, but instead pay them in the name of business transactions. A related party, taking the author's company as an example. In March 2005, it paid 20 million yuan to a certain Dalian company (a related party) in the name of a business transaction. The heating company was credited to the "other receivables" account, and the other company Will be credited to the "other payables" account. As a result, in accordance with existing accounting principles, only one debt and one debt will be listed in the year-end balance sheet of the two companies at the end of the year. Nothing is shown in the table, but everyone knows that even if the heating company does not calculate the loan interest rate, even if it calculates the annual deposit interest rate (2.25%), it lost a total of 337,500 yuan of interest income in 2005. Financial expenses of 337,500 yuan were underpaid (78,300 yuan if the loan interest rate was used), but under current accounting standards, neither revenue nor expenses were recognized Moreover, it cannot be reported in the statement. In this way, in the name of transactions, affiliated companies can transfer interest income without any shame, and the related policies of the existing accounting standards, including the relevant provisions of tax laws, are ineffective. It can be imagined that if comprehensive income is adopted, it is clear that this part of the costs must also be reflected in the statements of the two companies, because this is the true profit figure of the two companies, so that external investors, including the national tax authority, can get more True, accurate, and useful decision-making information. ^[2]

3.Insufficient reporting of current earnings

It can be said that China's current earnings report only reveals the tip of the iceberg. Information disclosure is not enough. The entire iceberg we need. Under the knowledge economy environment, knowledge-based information technology can not only transfer a large amount of information quickly, but also provide users with a means to directly analyze this information. China still maintains the traditional method of information disclosure, which obviously lags behind the development of the times. Accounting work should provide reports with multiple attributes, including both the lowest-level raw data and highly concentrated comprehensive information, including quantitative information. , Also includes qualitative information, including both historical information and forecast information, so that accounting information disclosure better reflects the characteristics of relevance.

4. Traditional income is lighter than soft and more hard, and the disclosure of soft assets is not scientific

Today in 2006, we can clearly see that the adjustment of the global economic structure is in the ascendant, adjust the industrial structure, vigorously develop high-tech industries, the world economy is moving from the era of industrial economy to the era of knowledge economy, and the knowledge economy has changed the structure of corporate resource allocation. With the development of the knowledge economy, the content of accounting measurement has become increasingly rich and the scope has gradually expanded. Accounting measurement technology must be improved, developed, and improved. How to measure knowledge capital has become an important subject.