Comprehensive Income

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Comprehensive Income

Comprehensive Income is a term used in IFRS (International Financial Reporting Standards). Comprehensive Income equals net income + other comprehensive income.

Net income is the profit made by the company. Other comprehensive income is the increase or decrease in market value of unsold assets. For instance, let’s say you bought some stock for $10,000 and sold it for $25,000. The $15,000 in profit would become part of your net income. But what if the stock increased in value to $25,000 and you didn’t sell it. In that case the $15,000 would become part of other comprehensive income. In a way it is income you COULD have if you decided to sell. It’s a gain you haven’t recorded as part of net income. If you bought stock for $10,000 and it decreased in value to $3,000 you would have other comprehensive income of negative $7000 or a loss you have not recorded as part of net income.

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