Other comprehensive income: one statement or two
What IAS 1 means by other comprehensive income, the choice of one combined statement or two, which items belong there, and what to do when there are none.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
For most small clients, other comprehensive income is a heading with nothing under it. The statement shows profit for the year, a line for other comprehensive income with a dash, and a total comprehensive income identical to the profit. It is easy to treat the whole topic as a formality.
Then a client buys a portfolio of government bonds it intends to trade from time to time, or revalues its head office, or suffers an impairment on a property it carries at a revalued amount, and the formality becomes a real presentation question. This article covers what IAS 1 means by other comprehensive income, the choice between one statement and two, the items that can land there, and how to keep the totals consistent in Achekam.
What IAS 1 means by other comprehensive income
IAS 1 lists the components of a complete set of financial statements: a statement of financial position, a statement of profit and loss and other comprehensive income, a statement of changes in equity, a statement of cash flows, and notes. Other comprehensive income is therefore part of the core set, not an optional extra.
IAS 1 describes other comprehensive income as those items of income and expense that are not recognised in profit or loss in accordance with IFRS Standards. The definition works by exclusion. Items do not go to other comprehensive income because management prefers to keep them out of profit; they go there because a specific standard says they are not recognised in profit or loss. Without such a requirement, an item belongs in profit or loss.
Note the timing. The IFRS Foundation's IFRS 18 page states that IFRS 18 replaces IAS 1 for annual reporting periods beginning on or after 1 January 2027. Check how IFRS 18 treats this presentation when the client's first year under it arrives.
The choice: one combined statement or two separate statements
IAS 1 allows an entity to present either a single combined statement of profit and loss and other comprehensive income, or two separate statements.
| Approach | What the reader sees |
|---|---|
| One combined statement | Income and expenses down to profit for the year, then other comprehensive income items, then total comprehensive income, on one page |
| Two statements | A statement of profit or loss ending at profit for the year, followed by a separate statement starting from that profit, adding other comprehensive income and arriving at total comprehensive income |
Neither is more correct. A combined statement keeps everything in one place, which suits a small client with few or no such items. Two statements give profit for the year its own page and its own final line, which some directors and lenders prefer when other comprehensive income is large or volatile and they do not want it read as part of trading results.
Whichever is chosen, use it consistently from year to year, and make sure the statement titles match the choice. The decision interacts with the analysis of expenses on the face of the income statement, discussed in expenses by nature or by function.
Items that can land in OCI, such as assets at fair value through OCI and revaluation decreases
Two examples come up in small and medium clients.
Financial assets at fair value through other comprehensive income. Under IFRS 9, financial assets are classified and measured at fair value through other comprehensive income if they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. A client holding bonds for their interest but selling them when it needs cash may fall here, and the fair value movements then belong in other comprehensive income. How to reach that classification is covered in classifying a client's financial assets.
Revaluation decreases. IAS 36 states that an impairment loss is recognised immediately in profit or loss, or in comprehensive income where it is a revaluation decrease under IAS 16 or IAS 38. A client that carries property at a revalued amount and then suffers an impairment on it may therefore record part of the loss outside profit.
Other standards place further items in other comprehensive income. Before using the line, identify which standard requires the item to be there; if none does, it belongs in profit or loss.
Most small clients have no OCI: saying so cleanly
Where a client has no items of other comprehensive income, keep the presentation simple and clear. A combined statement that shows profit for the year, a line for other comprehensive income with no amount, and total comprehensive income equal to the profit tells the reader everything. Avoid inventing sub-headings for categories that are empty; they add length and suggest items exist.
Check the client's circumstances each year, though. The first year a client acquires an investment portfolio or adopts a revaluation policy is the year other comprehensive income stops being empty, and the layout should change with it.
Setting up the lines in the Studio so totals still agree
Achekam's Studio builds a draft set from a mapped trial balance, including the four primary statements, with every figure calculated in code. A block a person edited is kept when the draft is rebuilt. A firm can add its own statement lines and groups and change the wording of any row title, and later builds keep those choices. Each custom line still totals into a standard line, so the notes and the cash flow stay consistent with the face of the statements.
For a client with other comprehensive income:
- Map the accounts that carry the year's movements, such as a fair value reserve or a revaluation reserve, then check in the draft that the movement appears under other comprehensive income and not in profit; if it does not, fix the mapping before going further.
- Name the lines in plain terms, such as "Fair value movement on bonds held".
- Agree total comprehensive income to the movement in equity in the statement of changes in equity.
- Confirm the cash flow is unaffected, because these movements are not cash.
The IFRS Foundation's IAS 1 page summarises the standard's requirements for the presentation, structure and minimum content of financial statements. When a client's other comprehensive income is empty, check that it should be; when it is not, check that a standard put each item there.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
