statements should begin the second statement with net income, the bottom
line of the first statement. An enterprise that chooses to display
comprehensive income in an income-statement-type format by using one
statement should include net income as a subtotal within that statement.
An enterprise that chooses to display comprehensive income in a statement
of changes in equity should display net income in that statement in such a
way that it can be added to the components of other comprehensive income to
arrive at total comprehensive income. Appendix A includes illustrations of
a one-statement and two-statement approach as well as two illustrations of
a statement-of-changes-in-equity approach.
Display of Related Tax Effects
100. The Board had two competing objectives in considering whether the
components of other comprehensive income should be displayed before or
after their related tax effects. The first objective was to facilitate the
traceability of reclassification adjustments from other comprehensive
income to net income. Because the corresponding net income components
generally are displayed before tax, to achieve that objective,
reclassification adjustments must be displayed before tax and,
consequently, other comprehensive income items also must be displayed
before tax in a financial statement.
101. The second objective was to show clearly how other comprehensive
income items change the accumulated balance in equity. Because accumulated
other comprehensive income is displayed in the equity section of a
statement of financial position net of tax, to achieve that objective, it
is necessary to display the changes that are incorporated into that balance
net of tax.
102. Some Board members were more concerned about the traceability of
reclassification adjustments from other comprehensive income to net income
than they were about the transfer of other comprehensive income items to
their accumulated balance in equity. Therefore, they favored a display
whereby an enterprise would show all components of other comprehensive
income on a before-tax basis and display the tax effects of those items on
one line, similar to the way in which the tax effects for income from
continuing operations are displayed.
103. Other Board members thought that a net-of-tax display would be
acceptable as long as adequate disclosure of the related tax effects was
provided so that before-tax amounts could be ascertained. Furthermore,
because of its decision to permit an enterprise to display comprehensive