CFA Level I Exam · Analyzing Income Statements

Comprehensive Income and Other Comprehensive Income

Updated 7 October 2026 · Fact-checked

Comprehensive income is the total change in equity from non-owner sources in a period. It equals net income plus other comprehensive income (OCI). OCI holds gains and losses that bypass the income statement, such as foreign currency translation and fair value changes on certain investments. To solve questions, add or subtract each OCI item.

Understand Comprehensive Income and Other Comprehensive Income

Net income is the profit reported at the bottom of the income statement. But some gains and losses change equity without ever passing through net income. These go straight to equity through other comprehensive income (OCI).

Comprehensive income is the full change in a company's equity during a period from all sources except transactions with owners (share issues, buybacks, dividends). So: comprehensive income = net income + OCI.

Why have OCI at all? Some items are unrealized and volatile. Putting them in net income would make earnings swing with market prices or exchange rates. Standard setters decided to show them separately, but still report them.

Under IFRS, the main OCI items are:

Foreign currency translation gains and losses from consolidating foreign subsidiaries.
Changes in fair value of equity investments that the company elected to measure at fair value through OCI.
Changes in fair value of debt investments held at fair value through OCI (business model of collecting cash flows and selling).
Remeasurements of defined benefit pension plans (actuarial gains and losses, and return on plan assets above the interest amount).
Revaluation surplus on property, plant and equipment and intangibles under the revaluation model.
The effective portion of gains and losses on cash flow hedges.

OCI items accumulate in a separate equity component called accumulated other comprehensive income (AOCI) on the balance sheet. Some items are later reclassified to net income (for example, translation differences when a foreign operation is disposed of, and cash flow hedge amounts when the hedged item affects profit).

Other items are never reclassified to profit or loss under IFRS. Pension remeasurements and changes on equity investments at FVOCI are not reclassified. Revaluation surplus is also not reclassified to profit or loss, but it may be transferred within equity to retained earnings (for example, on disposal of the asset).

Note the old term 'available-for-sale' belongs to earlier standards and US GAAP; under IFRS 9 the categories are FVOCI, FVTPL and amortized cost. Under US GAAP, available-for-sale debt securities still sit in OCI.

Key formulas to remember

Comprehensive income: Comprehensive income = Net income + Other comprehensive income; Use after-tax amounts. OCI can be negative.
Change in equity from OCI: Ending AOCI = Beginning AOCI + OCI for the period; Any reclassification to net income is already part of the period's OCI as an offset.
Total change in equity: Δ Equity = Comprehensive income + Share issues − Buybacks − Dividends; Owner transactions are excluded from comprehensive income.
Comprehensive income attributable to parent: Parent's share = Total comprehensive income − Non-controlling interest share; Both net income and OCI are split between parent and non-controlling interests.

How to solve Comprehensive Income and Other Comprehensive Income questions

Use this method for any question on comprehensive income or OCI.

1Identify what the question asks: net income, OCI, comprehensive income, or ending AOCI.
2List every item given and label each as net income item or OCI item.
3Check that OCI items are after tax. If pre-tax, apply the tax rate to get the after-tax figure.
4Give each item its sign: gains positive, losses negative.
5Sum the OCI items to get total OCI.
6Add OCI to net income to get comprehensive income.
7Exclude dividends, share issues and buybacks; they are owner transactions.
8If asked about AOCI, add the period's OCI to the opening balance.

Quickest way: Sort, sign, add

When to use it: Use when the question lists many gains, losses and equity movements and you have about 90 seconds.

Cross out dividends, share issues and buybacks first.
Underline items you know are OCI: translation, FVOCI changes, pension remeasurements, cash flow hedge effective portion, revaluation surplus.
Check whether net income already includes any FVTPL gains; do not count them twice.
Add net income and signed OCI. Pick the matching option; the options are ordered smallest to largest, so check the sign first.

Common mistakes in Comprehensive Income and Other Comprehensive Income

Subtracting dividends when computing comprehensive income.
Dividends reduce equity, so they feel like part of the total.
Fix: Comprehensive income excludes all owner transactions. Dividends only affect retained earnings.
Double counting a fair value gain in both net income and OCI.
Students see 'unrealized gain' and assume it is always OCI.
Fix: Check the category. FVTPL gains are in net income. Only FVOCI items go to OCI.
Using pre-tax OCI amounts.
The tax line is easy to miss in the stem.
Fix: Read whether OCI is stated net of tax. If pre-tax, multiply by (1 − tax rate).
Thinking all OCI items are later recycled into profit.
Reclassification is taught for translation and hedges, so it feels universal.
Fix: Under IFRS, pension remeasurements and FVOCI equity changes are not reclassified to profit.
Using 'available-for-sale' as an IFRS category.
Older textbooks and US GAAP use the term.
Fix: Under IFRS 9 think FVOCI. Use available-for-sale only if the question says US GAAP.
Treating comprehensive income as a cash measure.
Gains sound like money received.
Fix: OCI items are mostly unrealized and non-cash. They change equity, not cash.

Worked examples

Example 1

A company reports net income of €480 million. During the year it records a foreign currency translation gain of €35 million, an unrealized loss of €12 million on a debt investment held at FVOCI, and a pension remeasurement loss of €8 million (all after tax). It pays dividends of €90 million. What is total comprehensive income?

Show the solution

Net income = €480 million.
OCI items: +35 − 12 − 8 = +15 million.
Dividends of €90 million are an owner transaction, so ignore them.
Comprehensive income = 480 + 15 = €495 million.

Answer: €495 million. Options would be ordered smallest to largest, for example €405 million, €495 million, €510 million; the traps are subtracting dividends (€405 million) or ignoring the signs of OCI items.

Example 2

Opening AOCI is a loss of $20 million. During the year, net income is $150 million. Comprehensive income is $162 million, and the only OCI items are a translation gain and a cash flow hedge loss of $5 million (effective portion, after tax). Assume all OCI accrues to the parent, there is no AOCI attributable to non-controlling interests, and no reclassification adjustments occurred during the year. What is the translation gain and the closing AOCI?

Show the solution

OCI = comprehensive income − net income = 162 − 150 = $12 million.
OCI = translation gain − 5 = 12, so translation gain = $17 million.
Under the stated assumptions, closing AOCI = opening AOCI + OCI = −20 + 12 = −$8 million.

Answer: Translation gain is $17 million and closing AOCI is a loss of $8 million, given the assumptions that all OCI accrues to the parent and no reclassification occurred.

Exam tips

Read each item's category word: FVTPL goes to net income, FVOCI goes to OCI.
Expect questions asking which item is excluded from OCI; dividends and FVTPL gains are classic distractors.
Check whether amounts are after tax before you add anything.
Know the IFRS list of OCI items cold: translation, FVOCI, pension remeasurements, revaluation surplus, cash flow hedges.
Only treat 'available-for-sale' as OCI if the question says US GAAP.

Practice questions from Analyzing Income Statements

Comprehensive Income and Other Comprehensive Income in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Comprehensive Income and Other Comprehensive Income: frequently asked questions

What is the difference between net income and comprehensive income?

Net income covers items that pass through the income statement. Comprehensive income adds OCI, which holds gains and losses that go straight to equity. The two differ by the amount of OCI.

What are examples of other comprehensive income under IFRS?

Foreign currency translation of foreign subsidiaries, fair value changes on FVOCI investments, pension remeasurements, revaluation surplus on PP&E, and the effective portion of cash flow hedges. These are reported after tax.

Where does OCI appear on the balance sheet?

It accumulates in equity as accumulated other comprehensive income (AOCI), or as separate reserves. It is separate from retained earnings.

Is OCI ever moved into net income?

Some items are reclassified when realized, such as translation differences on disposal of a foreign operation and hedge amounts. Under IFRS, pension remeasurements and FVOCI equity changes are not reclassified to profit, and revaluation surplus is not reclassified either, though it may be transferred within equity to retained earnings.