Question

Should other comprehensive income be eliminated? Why or why not?

Answer 1

Other comprehensive income is those revenue,expenses,gain and losses under both GAAP and International Financial Reporting Standard that are excluded from net income on the income statement indeed , they are listed after net income on there income statement. Such changes were adopted to improve comparability,consistency and transparency in financial reporting. The concept of comprehensive income statement is closely related to income statement concept of clean vs dirty income/surplus. Under the clean surplus approach all income items must pass through income statement. Prior to OCI many items were not required to be reported anywhere in the financial statement ,and many items bypassed income statement and went directly to owner's equity. This is termed as dirty surplus approach as many items bypassed the income statement. Other comprehensive income includes all those items which bypassed income statement and went directly to owner's equity with a view to inmprove transparency,consistency and comparability. Hence, OCI should not be eliminated.