In financial accounting, corporate income is broken down in a multitude of ways, and firms have some latitude on when to recognize and report their earnings. To compensate for this, the Financial Accounting Standards Board (FASB) has firms collect and report information that helps to provide perspective for investors and analysts. Two such measurements are comprehensive income and other comprehensive income.

Comprehensive Income

Comprehensive income is used to measure the change in an owner's interest in a business. This is done by charting the change in a company's net assets from non-owner sources, including all income and expenses that usually bypass the income statement because they have not yet been realized.

Comprehensive income is normally listed in a separate statement than income, which does include changes in owner equity. Comprehensive income is calculated by adding net income, the sum of recognized revenues minus the sum of recognized expenses, to other comprehensive income.

Other Comprehensive Income

Other comprehensive income is a catch-all for the items that cannot be included in typical profit and loss calculations. Examples of the types of changes captured by other comprehensive income include:

These items occur rather infrequently for smaller businesses, so other comprehensive income is most important for valuing larger corporations. Watching the unrealized performance of a firm's investment portfolio can reveal the possibility of major losses down the road. You can see how overseas operations and currency hedging affect corporate performance, for example.

Comprehensive income and other comprehensive income help bring complicated financial reporting into a clearer view.