Intermediate Accounting 5th ed.
Thomas H. Beechy
Schulich School of Business
York University
Joan E. D. Conrod
Faculty of Management
Dalhousie University
Elizabeth Farrell
Schulich School of Business
York University
Slides prepared by Ingrid McLeod-Dick – Finance Department – Schulich School of Business
Copyright © 2010 McGraw-Hill Ryerson Ltd
Statement of Income and
Comprehensive Income
Chapter 3
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What Does the Term “Income”
Mean?
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“Income” may refer to only revenues; or
“Income” may refer to ancillary sources of
revenue such as “interest income”; or
“Income” or “net income” may refer to profit or
loss for the period which might also be referred
to as “earnings”
Be careful to understand how the term is being
used
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Economic Income vs. Accounting Income
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Economic Income: an increase in the wealth of
a corporation; a measure of income based on
events rather than transactions.
Accounting income: Using the historical cost
measurement principle, accounting income is an
increase in the reported wealth of a corporation
based on actual transactions completed.
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Economic Income vs. Accounting Income
(cont’d)

IFRS standards are moving towards the concept
of economic income since some “value changes”
are recognized, even though no transaction has
occurred:
 Financial assets and liabilities are reported at
fair value at each reporting period
 Companies may choose to fair value PP&E
and investment properties
 Biological assets are measured at fair value
less costs to sell
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Copyright © 2010 McGraw-Hill Ryerson Ltd
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Comprehensive Income
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Defined as all changes to owner’s equity that
are not the result of transactions with owners
Includes:
 Periodic profit or loss; and
 Other comprehensive income (OCI)
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Comprehensive Income
Statement
 These amounts may be presented as:
 a single continuous statement called the
Statement of Comprehensive Income
(preferred presentation format); or
 two separate statements - called the Income
Statement and the Statement of
Comprehensive Income (which starts with
the profit of loss)
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Copyright © 2010 McGraw-Hill Ryerson Ltd
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Other Comprehensive Income (OCI)
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OCI includes changes in values that have not
been realized which might represent:
 Items that will be recognized in income once
realized (i.e. fair value changes in financial assets)
 Items that will be matched by an offsetting gain or
loss in a future period (i.e. a qualifying hedge of a
future transaction)
 Items that will impact retained earnings directly
and not “recycle” through to net earnings (i.e.
revaluation surpluses on property, plant and
equipment)
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