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Other Comprehensive Income (OCI)

Step-by-Step Guide to Understanding Other Comprehensive Income (OCI)

Last Updated May 23, 2023

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Other Comprehensive Income (OCI)

What is the Definition of Other Comprehensive Income (OCI)?

The “Other Comprehensive Income (OCI)” line item is recorded on the shareholders’ equity section of the balance sheet and consists of a company’s unrealized revenues, expenses, gains, and losses.

While such items affect a company’s balance sheet, the effect is not captured on the income statement (and has no impact on net income) per GAAP reporting standards.

Once the “paper” gain or loss is realized, it would then appear and affect the company’s income statement and net income.

Further, since net income is unaffected by OCI, neither is the retained earnings account on the balance sheet.

A “gain” would cause the OCI account to increase (credit), while a “loss” would cause the OCI account to decrease (debit).

What is Included in Other Comprehensive Income (OCI)?

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
  • Unrealized Gains and Losses on Pension Plans, i.e. Employee Post-Retirement Plans

For instance, suppose a company has a portfolio of bonds and the value of those debt securities has changed.

The difference would be recognized as either a gain or loss in the OCI line item of the balance sheet.

Why? The gain or loss has not been realized yet, so there will be no income statement or net income impact.

However, once the bond investment has been sold — i.e. the gain or loss has now been “realized” — the difference would be recognized on the income statement in the non-operating income / (expenses) section.

Accumulated Other Comprehensive Income: Balance Sheet Example

The screenshot below of Amazon’s balance sheet for the fiscal year ending 2021 shows an example of other comprehensive income (OCI).

Rather than “Other Comprehensive Income (OCI)”, Amazon records the line item as “Accumulated other comprehensive income (loss)”, which is also common as the two terms are interchangeable.

OCI Amazon Example

Amazon OCI Example (Source: 10-K)

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Emmanuel Ssemaganda
April 12, 2024 9:22 am

Is accumulated other comprehensive income included in the statement of changes in equity and if it’s included, under which component

Brad Barlow
April 12, 2024 1:16 pm

Hi, Emmanuel,

Yes, it is included in the SSE, and is usually given a column of its own, labelled AOCI.


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