When the company reports net income on its income statement, that income amount is added to the stockholders’ equity or property rights. Therefore, the components of net income affect equity. Those
components of net income are limited to revenues, expenses, gains, and losses. All of those components of net income are included in comprehensive income. But there are changes in stockholders’ equity that are
comprehensive income but not net income. Some changes in assets and liabilities go right to the stockholders’ equity section of the balance sheet without first affecting net income and being included in the income statement. Unrealized gains and losses that are included in comprehensive income but are not recognized or reported on the income statement are related to foreign currency translation adjustments, available-for-sale investments, and derivative financial instruments.
Nov 23
