Total comprehensive income shows all changes in equity other than those originating from contributions from or distribution to owners. In the financial statements, comprehensive income is equivalent to net income plus other comprehensive income.
Important comprehensive income. It reports the total of all operating and financial events that could potentially affect the owner’s interest in the business.
We calculate total comprehensive income by adding net income to other comprehensive components.
Total comprehensive income = Net income + Other comprehensive incom
Components of total comprehensive income
Several items fall into other comprehensive income, including:
- Unrealized gains and losses from available-for-sale securities.
- Unrealized gains or losses from hedging derivative contracts
- Adjustment of foreign currency translations.
- Certain costs associated with the post-retirement defined benefit plan.
For example, in the report of PT Astra Agro Lestari Tbk (AALI), the company reports total equity, net income, dividends, and comprehensive income as follows:
In the report, other comprehensive components include:
- Remeasurements from post-employment benefit obligations of Rp23 million
- Items to be reclassified to profit or loss (cash flow hedge and related income tax) of Rp.129 million = Rp179 million – Rp50 million.
Thus, AALI’s total comprehensive income is Rp1,672 million = 1,521 + 23 + 179 – 50.
Next, in the equity section of the balance sheet, we calculate the total shareholders’ equity as follows:
Total shareholder equity = Initial shareholder equity + Total comprehensive income – Dividends = 18,712 + 1,672 – 910 = 19,475