Income Statement vs. Comprehensive Income Statement

Abstract

The objective of general purpose financial statements is to provide information about the financial position, financial performance, and cash flows of a company that is useful to a wide range of users in making economic decisions. In June 1997, the FASB issued FAS130 on how to report comprehensive income, so second type of income statement is came up. Under the traditional income concept-income statement, extraordinary and nonrecurring gains and losses are excluded from income. Under the all-inclusive income concept- comprehensive income statement, all revenues, expenses, gains, and losses recognized during the period are included in income, regardless of whether they are considered to be operations of the period. International Accounting Standards Board (IASB) also introduced this issue in 2009. According to the standard a business entity using IFRS must also include a statement of comprehensive income. The aim of this study is to discuss the necessity and need for presentation of two performance statements- income comprehensive income- especially from the perspective from investors while these items are stated in equity section of the balance sheets. Effects of this dual reporting of income statements which leads confusion are also discussed by examining cases from different countries and survey is conducted to BIST (Borsa Istanbul) 30 companies from Turkey.

Keywords: Income statement, comprehensive income statement, net income, dual reporting case, Turkey

Jel Code: M 41

DOI: 10.7176/EJBM/11-35-05

Publication date: December 31^st 2019