Other Comprehensive Income (OCI) (2024)

FAQs

What does OCI mean in other comprehensive income? ›

In business accounting, other comprehensive income (OCI) includes revenues, expenses, gains, and losses that have yet to be realized and are excluded from net income on an income statement. OCI represents the balance between net income and comprehensive income.

AOCI represents accumulated other comprehensive income and is stated at a point in time. It accumulates all the historical gains and losses that were recorded to OCI. OCI represents current year gains and losses that were not recognized in the income statement.

According to accounting standards, other comprehensive income cannot be reported as part of a company's net income and cannot be included in its income statement. Instead, the figures are reported as accumulated other comprehensive income under shareholders' equity on the company's balance sheet.

Other comprehensive income (OCI) is a term in business accounting that includes gains, losses, expenses and revenues that have yet to be realized and impact the company.

The most common examples of items included in OCI are the following: Unrealized Gains and Losses from Financial Instruments, e.g. Bonds, Derivatives, Hedges. Foreign Exchange (FX) Currency Adjustments.

The basic difference between NRI and OCI is that NRIs will continue to have their Indian citizenship, and the OCIs will have their respective citizenship based on the country of their origin. Yes, OCI cardholders can stay and work in India indefinitely.

For example: If a company makes investments in the stock market, the open profits or losses on the investments are properly listed in the other comprehensive income section of the balance sheet until the stocks are sold, at which time the profits/losses are realized.

A gain to OCI will result in an increase to equity (credit to OCI), while a loss will decrease equity (debit to OCI).

Accumulated other comprehensive income is a general ledger account that is classified within the equity section of the balance sheet. It is used to accumulate unrealized gains and unrealized losses on those line items in the income statement that are classified within the other comprehensive income category.

Profit or loss includes all items of income or expense (including reclassification adjustments) except those items of income or expense that are recognised in OCI as required or permitted by IFRS standards.

Is OCI part of retained earnings? ›

Because they are not reported in the income statement they do not affect the reported net income which is closed in the retained earnings accounts, therefore retained earnings do not include OCI.

Since the OCI items do not affect the net income, they do not cause a change in a corporation's retained earnings.

Other comprehensive income (OCI) is an accounting item for firms that includes revenues, expenses, gains, and losses that have yet to be realized.

A corporation's comprehensive income includes both net income and unrealized income. This unrealized income comes from nonowner sources. For example, it might relate to gains and losses from foreign currency transactions, or unrealized gains from hedge financial instruments.

Operating comprehensive income: This refers to all items of comprehensive income directly related to a business's operations. Examples may include interest, dividends and gains or losses from foreign currency transactions.

Other comprehensive income (“OCI”) is part of stockholders equity on the balance sheet and is not part of the income statement. OCI represents the current year activity that is used to calculated accumulated other comprehensive income (“AOCI”) at the end of the year. Either gains or losses are recorded to OCI.

Accumulated Other Comprehensive Income Formula

In general, we can calculate AOCI as the sum of Foreign Currency Translation Losses, Changes in Fair Value of Financial Instruments, and Pension Liability Adjustments. Applying the above formula, AOCI equals $10 million – $5 million + $2 million, which equals $7 million.

Comprehensive income can be expressed as: Comprehensive income = Net income + Other comprehensive income Other comprehensive income encapsulates items such as unrealised gains and losses on available-for-sale securities, translation adjustments on foreign currency, and adjustments to defined benefit pension schemes.