ASC 220 INCOME STATEMENT—REPORTING COMPREHENSIVE INCOME

This chapter provides guidance on the reporting, presentation, and disclosure of comprehensive income. In financial reporting, performance is primarily measured by net income and its components, which are presented in the income statement. A second performance measure-comprehensive income-is a more inclusive notion of performance than net income. It includes all recognized changes in equity that occur during a period except those resulting from investments by owners and distributions to owners. Because comprehensive income includes the effects on an entity of economic events largely outside of management's control, some have said that net income is a measure of management's performance and comprehensive income is a measure of entity performance. Comprehensive income is the change in equity that results from revenue, expenses, gains, and losses during a period, as well as any other recognized changes in equity that occur for reasons other than investments by owners and distributions to owners. Comprehensive income consists of: • All components of net income and • All components of other comprehensive income. The basic order of presentation of information in an income statement (or statement of income and comprehensive income) is defined by accounting standards, as shown by the diagram below. Other than in the section “Income from Continuing Operations,” the display of revenues, expenses, gains, losses, and other comprehensive income is predetermined by the Codification guidance. Only within income from continuing operations do tradition and industry practice determine the presentation.