Comprehending Comprehensive Income

Abstract

Comprehensive income (CI) contains a mixture of realised, unrealised, temporary, persistent and recyclable elements. How, when and where these elements should be reported in income and equity have been issues intensively debated (and changed) by international regulators over the last 20 years. This article traces the major threads of the debate and places changes within the context of empirical academic research. Our contention is that the recent IAS 1 (AASB 101) Presentation of Financial Statements, effective 1 July 2012, has benefited from past academic research that focused on the value relevance from disaggregation and presentation of unrealised other comprehensive income (OCI). We conclude by outlining the equity posting and recycling to profit or loss (P&L) issues and assert that, because of the inconsistent nature and complexity of OCI, it would benefit from further research.