Comprehensive Income Overview

Okay na, so ituloy na natin ang ating discussion sa financial statements. And today, ang pag-uusapan natin ay patungkol sa comprehensive income statement. Ang mangit dito, income statement is a formal statement showing the financial performance or profit or loss of an entity for a period of time. Financial performance is also known as results of operation. So kung gusto mong makita ang resulta ng operasyon ng negosyo, ang kanyang kinita, profit or loss, o yun ang nga financial performance in a given period, ang titignan mo na report, ang financial statements, ay itong income statement na nga. So balit ngayon, hindi na yun yung tawag sa kanya, pinalawak na comprehensive income statement. Namamaya, mas liliwanagin natin kung bakit. Sa ngayon, lagyan din muna natin ang definition, ano ba itong tinatawag na comprehensive income. Ang mangit dito, it is the change in equity during a period resulting from transactions and other events other than changes resulting from transactions with owners in their capacity as owners. So meaning, ito yung paggalaw, yung maaaring pagtaas or pagbaba ng equity ng kapital sa isang panahon na dahil sa mga transaksyon at iba pang mga aganapan. na hindi ang dahilan ay ang mga may-ari. Kung mapapansin ninyo yung definition, hindi directly sinabi kung ano siya, but rather binanggit kung alin yung hindi. Again, ang sabi, ang comprehensive income ay mga pagalaw sa equity na hindi dahil sa may-ari, meaning hindi dito kasama yung investment ng owner, yung kanyang withdrawal, or kung sakali namang corporation, yung issuance of shares. or the payment of dividends but not because of the owners the reason why the equity has increased so if we will explain it more this is the comprehensive income if we will put the income not the other side there are two that can be included and those are profit or loss and this other comprehensive income let's just give a definition first profit or loss is the total income less expenses We just know that, right? The revenue, the earnings, you will reduce the expenses. That is what is called profit or loss. Excluding components of other comprehensive income. Because we are two, right? One is profit or loss, and the other is other comprehensive income. This is the other part of comprehensive income. What is this one? It comprises of items of income and expense. So meaning pala, itong profit or loss and other comprehensive income, are both income and expense. Okay? Ulitin ko. Other comprehensive income comprises items of income and expense including reclassification adjustments that are not recognized in profit or loss as required or permitted by PFRS. So again, pareha sila na income and expense. Ang pagkakaiba lang itong other comprehensive income ay income and expense na hindi nakakasama profit or loss because that's what the standard says. So what is this? This other comprehensive income. We can also have a video lecture on that. So if you want to see the depth, just go back there. At that point, it's an income and expense that happened today in this period. But its effect is not now but rather, it's still long. Therefore, even if it's an income and expense, Hindi siya na-classify or na-considered as profit or loss. Kasi itong profit or loss na to, ito yung income and expense na nare-recognize in this current period. Okay? Again and again, basta po pag sinabi natin comprehensive income, sila'y revenue and expenses. Ang pagkakaiba ng mong dalawang component, profit or loss, yung income and expense na nangyari this period and will be recognized this period. Yung normal na alam na natin. While ito namang other comprehensive income are income and expense that happened in this period but will not be recognized in this period but rather matagal pa. Yun lang yung mababaw na paliwanan dito sa OCI na ito. Pero yung kanyang lalim nandun po sa ating discussion sapagkat medyo kakaiba nga itong terminology na ito. Anyways, nalagyan na po natin ang definition kung ano itong comprehensive income. Now let's see how the Comprehensive Income Statement of the United States is done. What it says in its press release... presentation, merong dalawang paraan. The first one is what we call two-statement approach. Well, in una, gagawa ka ng income statement showing components of profit or loss. In pangalawa, idudugsung mo kasi nga two-statement approach is statement of comprehensive income. It starts with profit or loss as shown in the income statement plus or minus the components of other comprehensive income. So meaning, in this statement of comprehensive income, that you will do the second one, that's where you will see the other comprehensive income. And if we will put a few illustrations, here is its example, letter A. Two-step, two-statement approach. So the first statement above, we will notice, let's say the name of the company is ABC Company, income statement, the name of the statement, the previous one that was done, in the past few years. income statement and then for the year end of december 31 2024 para makita yung is yung period na ginagawa natin ng statement and then nakikita na nga doon yung mga revenues and expenses mga maya kuwabasahin po yan as we discuss components sources of income components of expense and the line items okay pero ang punto lang natin nakikita nga dyan yung income and expenses hanggang sa bumagsak o ang maging dulo is yung income after tax This is the... profit or loss na tinatawag income and expenses that are recognized in this current period so meaning pag tinanong ka makano yung totoong kinita ngayong 2024 makikita po natin sa income statement yung income after tax na nga okay ngayon dahil two statement approach yan after mong gawin ito gagawa ka pa ng isa yun namang statement na tinatawag na statement of comprehensive income So, like earlier, name of the company. The statement of comprehensive income and then for the year end of December 31, 2024, same period. Now, what he started, what he also mentioned in our reading is the income after tax. The income that you reported coming from the income statement. And then, he is adding the income and expenses that are not recognized in the current period. That is what we call other comprehensive income. Yeah or it will be deducted depending on what is there to get the so-called total comprehensive income so you will combine the two because we mentioned earlier that comprehensive income has two components so in this statement two statement approach income statement and the statement of comprehensive income let's move on it is not possible for the company to do that but rather a different approach This is what we call a single statement. approach. Ang bangkit dito, this is the combined statement showing the components of profit or loss and components of OCI or other comprehensive income in a single statement of comprehensive income. Ano ang sabi? Hindi mo na kinakailangang paghiwalayin sa dalawang magkaibang statement, yung profit or loss at yung other comprehensive income, but rather pagsasamahin mo na. At ang What you call them is a statement of comprensibility. income. You will notice the name, right? Because in the statement of comprehensive income earlier, even though the presentation is short because you just took the neto from the income statement, it is still a comprehensive income because there is profit or loss and there is also the OCI. There are no details in profit or loss because we only put the neto amount. But rather, they do not mention. Single statement approach, all of the components that you will notice are from the income statement to the net sales to the income after tax. You have shown all of those details. Because earlier, it was net only. And after that, just like earlier, you can add or decrease the other comprehensive income. You can add or decrease it depending on the effect. And then, to count the total comprehensive income, So what did we notice? Instead of separating, we will just do one statement of comprehensive income. So again, currently, what is required in the general purpose financial statement is either of the two. What you can do is separate the two statements. So that you can see that the OCI is separated in the current period. Or if you want to include it because you can see here the effect for the current period. And the effect as a whole, which is included in future periods of income and expenses, bottom up when Let's start with the total comprehensive income. Again, that is how we present a comprehensive income statement. By the way, we will also have pen and paper video discussion about how to do it. The sample... problems sources of income company okay we have four here the first one is sales of merchandise to customers and the most basic if you are a merchandising business or let's say manufacturing and you sell your products that is the sale of merchandise net sales that is in our presentation and then we have here rendering of services you might be a service business so therefore you are not selling merchandise but rather what we perform is services That's what we render. as income din yan. So maaaring po natin ilagay dun sa tax yung revenue naman ang normal na ginagamit na term dun revenue okay hindi sales. And then we have here use of entities resources. When we say resources hindi e malamang asset yan. So yung ibang assets natin pinakita rin natin. So halimbawa meron kang ginawang paupahan so you will have an income. Yung extra ng cash mo ininvest mo therefore nagkaroon ka ng interest income or investment income or royalty income, and other types of income that are not... for selling of merchandise or rendering of your services but rather it is through the use of your resources and then number four is disposal and this person disposal If you bought PPI at P100 and sold it at P150, you will earn. It is considered as disposal of resources other than product. Because you are not selling your equipment, your investment. Those are the gains. These four, they are the ones who can be seen in the presentation above. That's why we noticed that we have here the net sales, you know that is selling product, and we have here other income at the bottom. So this other income can go in there. the use of entities resources and the disposal of resources other than that okay so that is the sources of revenue of income of business entities and then we have here component of expense income statement we have the revenue of income of resources while the outflow what the out are considered as expenses I mean you my guest was not in right in the indic cash and over the gas does not mean okay so we have here five the first one is cost of goods or cost of sales simply the man you product of a big minute am I pulling any of products considered as cost of goods or not it all right and then but in a minus young the law and Loma lavas a young gross income meaning you've got to move you to move the second event and I'm productive okay and then we have here distribution costs or selling expense administrative expense by the way That's why these two are considered as operating expense. Meaning, they are not part of the product but they need to run the business. They are also necessary. One is about selling the product. For example, advertising. You need to promote your product to be sold. So it's not product cost because it's not the product itself. It's just the ways to be sold. You hired an agent to sell this. The rent of your own store, right? na ginagamit po pagbebenta, they are considered as distribution or selling expense. While ito namang administrative expenses, sila yung tipong ginagamit sa pagnenegosyo. Okay? Na hindi rin tungkol sa kudokto at hindi rin sa pagbebenta. Basta kailangan siya para sa management ng business itself. Halimbawa, kailangan mo nga ng accountant tayo na magkikwenta ng income ng NBT. So, malamang bahagi yun na tinatawag na administrative expenses. At marami pang iba na I believe marami na kayong ID. idea of what that is. And then we have here, again, again, these two are considered as part of operating expense. The next one is other expenses. That is if it is not A, B, C, and E. So, the so-called other. In the first time, it was called extraordinary items. But now, it's not like that. Usually, your losses are already there. So, for example, you have PPE like earlier. Earlier, you sold and earned. Therefore, there is a source of but instead, you sold your PPE. Let's say machine, okay, at nalugi ka. So that can be considered as other expenses kasi hindi naman siya kasama sa operasyon, diba? So other expenses yun. The next one is income tax expense. Yan naman syempre yung share ng government kapag kakumina tayo. taxes that we require to pay, which is probably separate from his presentation. If we notice here, in what we are showing, we have here now the gross income, we add the other income, if you have other sources. It's good to highlight above the income statement the main source of your operation Then add other income to get this total income And then we deduct the expenses This is what we mentioned earlier We have the selling, the admin, then the other expenses The finance cost is not only mentioned in the component expenses In the sources I collected But still, it's mentioned in the line items that we'll talk about later The finance cost is required to be shown way of finance goes is you our expenses in borrowing money or sources of our financing to be able to have resources to cash the entity so normally it includes the bank charges such as interest expense and then if we continue we will determine the income before tax we have to deduct this another one income tax expense to get our income after tax So again, this is the source of income. and component of expenses okay now I'm on the I for the current period my earning income at expenses pero in the other period my son were there okay marindita so you still bend it is resources or other expenses so Bali okay so by the time he did a month for the current period of effect me a and I would know how to handle I other comprehensive income okay so the only but I know So, how or what is the... of income statement. Is it always like this, like what we've seen earlier? Actually, it's not. There are two ways on how to do it, or the forms of income statement. The first one is functional presentation, how you present. You classify expenses based on their function. So actually, the name of the presentation, that's also the definition, based on function. What is this function of expense? This is what I've been talking about if it's related to product, sa pagbabenta, sa administration, or sa financing whatsoever. Yun yung tinatawag na functional presentation. Majority of the income statements presented are based on functional presentation. Okay? Pero wala din namang masama kung ito ang gusto mong gawing presentation. Itong tinatawag na natural presentation. Expenses are aggregated based on nature. So, nandun din yung meaning dun sa mismong pangalan. Natural. kung ano ba talaga yung nature of expense hindi ba yung function. Ang ibig sabihin halimbawa ganito, salary expense, hindi ba yan ay nag-a-arise or nagkakaroon sapagkat meron isang tao na sumweldo. Under functional presentation, aalamin ba saan ba or ano ang na-contribute nung salary expense ay nung tao dun sa entity. Kung halimbawa yung tao na yun ay part ng direct labor, so meaning kailangan siya sa pag-produce. or pagawa ng produkto, yung salaries niya will be part of cost of goods sold. Kung sakaling yung salaries na yun, the accountant yung gumawa ng income statement, so sa admin yun, so therefore that will be part of administrative expenses. Kung yun naman yung salary ng ahente na nagbenta ng produkto, therefore that will be part of distribution expense. So what I am trying to say is, even though A is ay yung account title, salaries expense, hinihiwa-hiwalay mo siya based on function. You ain't cool presentation is your functional presentation so valid consigning natural presentation in the monarchy not allowing he why he will he you salaries expensive to an Abbas a bus at the present Russia as one line item salaries expense the only disadvantage here I mean you other way the Nia is in the moon I'm a lot of money compared to an busier see you will not know if it is admin, selling or not all your salary expenses will be deducted for those who are still not sure, here is the presentation the natural presentation the revenues are on the top we have here net sales and other income the cost of goods sold will not be deducted because you are not classifying the expenses by function therefore, all of the above are income to get this what we call total income and then below it You will show all your expenses. Let's say this is the net purchases. All the purchases are there. And that's the salary expense irrespective of the department or function. Depreciation is the same. It used to be divided. happy dinat in shock was a little asset that way para selling selling you and admin admin you depreciation pero is a compound I tell the land the procedure the land where I'm a couple be like one of the pinnacle just to emphasize the point natural presentation and then we will determine the income before tax then less income tax expense to get this income after tax. If you have added comprehensive income, you will probably add more. But our presentation, if it's a natural presentation, it's a simple example. We will just show you the problem solving later on. Now, this is the highlight of our discussion. And here are the what are the line items in statement of comprehensive income. Ibig sabihin po ay, ano ba talaga dapat yung mga makikita natin dito sa income statement natin or comprehensive income. First, we have here revenue. So, natural, kinakipakita mo kung magkano kinita. Yung revenue, I mean. O yung benta. And then we have here, gain or loss from the recognition of financial asset measured at amortized cost. Ito muna yung point natin, diba? Pag sinabing siya ay part ng line item, If you're not pregnant... you can see it here in the statement that when you give it to the negotiator he will read these because for example you have a lot of sources of revenue you have rent you have interest you have let's say royalties it can be in the face of financial statements he will not see it in detail but rather he will see it in the note because what they are showing here revenue or the total other income. We will just look at the notes to see which one is the detail. What is mentioned here is the line item in the statement of comprehensive income they are the ones that we should see ourselves in the financial statements. And that is the gain or loss from the recognition of financial asset measured and amortized. Let's simplify it first. Sometimes you have Investment in bonds. That's the financial... asset measured and amortized costs normally in the entire machine with mature I'm far and I'm pagita my interest pero pano pong sahalit na maintay mo shang mag mature even and ammo the recognize mo a dialed on my arm again or loss you know result na yun a kinakailangang ipakita mo separately some face non finish up non non income statement okay you love what a major have a non concept Basahang punto, dapat makikita sila. Explain ko lang kung anong ibig sabihin ng line. Okay? Pero hindi na po natin sobrang babalikan na dapat makita siya. Ngayon na lang ulit. Okay, number three, we have finance costs. Yun ang mga expenses for the sources of financing natin, such as bank charges and interest. Share of income or loss of associate and joint venture accounted for using equity method. So, di ba kapag ka associate and joint venture, Let's say for example, you have an association, even without a declaration of dividends, you get the percentage share of its profit. That is the equity method. So meaning, this investment income from this scenario, okay, you need to see it separately from the income statement. Then income tax expense. Six would be gain or loss on reclassification of financial statement from amortized cost of fair value through profit or loss. Pero din may gain or loss. Pero hindi nasa... recognition of investment in bonds or financial asset at amortized cost but rather it is gain or loss from reclassification reclassification meaning may pinanggalingan mula sa amortized cost lumipat through profit or loss yung daw changes dun yung paglipat na yun yung reclassification i mean yung gain or loss kinakailangan makita separately then gain or loss on reclassification of financial asset from fair value through OCI to fair value through profit or loss. So, just like earlier, there is a reclassification. This time, it came from FBOCI. This is probably the debt securities OCI. Because if it's FBOCI, equity securities, it cannot be reclassified. This is FBOCI debt securities. And it has already been transferred to FBPN or Fair Value True Profit or Loss. Its gain or loss, again, should be seen separately in the income statement. And then we have here a single amount of price. discontinued operation This is a different case. For example, the entity has many divisions or branches. And then one of its divisions, it thought to discontinue it. It could be mixed, but much better if the presentation is separated so that the income statement will not be misread. For example, Where is your division? For simplicity, each division has 1 million sales. So if you make net sales, you can show that the net sales is not 10 million but rather 9 million. Because your FS will be confused and think that 10 million will be sold today so next year it might be 10 million again. That's why he'll be confused. Why? How if you stop one? So, he expects that next year, if you present 10 million, maybe 10 million too. Because of one thing, you will stop having discontinued operation. Therefore, much better, you will only show 9 million net sales. And the net result of the operation of a division that will be discontinued, will be shown to a line item. So, what will happen here, we have income before tax. So, you can call it income from continuing operation. And then meron kang isisingit na isa pa, income or loss from discontinued operation. Separate siya. By the way, sa discussion ng discontinued operation na topic, dun mahahighlight yung presentation na sinasabi natin sa income statement ngayon. Basta yung punto lang po natin. Again, kung sakaling meron kang discontinued operation, magpapakita ka ng single amount. Ibig sabihin, lahat ng result niya, yung income and expenses, neto na. You will not see the details, it's just the schedule. It's just a line and the result of income or expense is a discontinued operation. By the way, it's not because discontinued operation is always loss. It can also be income, they just thought of discontinue. Okay? And then we have here profit or loss for the period. You can see it at the end. And then we have here other comprehensive income. You can see it here. Other comprehensive income has many examples. We can see that. is in the schedule, its composition. It's in the notes. But in the financial statement phase, of course, the total of the other is comprehensive income. And then, at the very end, you can also see the comprehensive income for the period. That's the bottom line. Total comprehensive income. So, that 11 is what you can see in the phase of comprehensive income statement. Okay? That's not the type of... That's all you need to know. That's what the Pass 1 presentation says. You can add more entities if you think it's important to read the face of the income statement. By the way, there is also a required disclosure on the face of the income statement. The disclosure is the added story. Most of the disclosures are seen in notes or financial statements. But there are disclosures. even if it's in the income statement, in its face, it's right below it. You can see it in the same report. What are the two? First is profit or loss attributable to non-controlling interests and owners of the parent. And then the second one is total comprehensive income attributable to non-controlling interests and owners of the parent. So it's like both, right? What it says in letter A is that it's probably profit or loss. that is the result of operation for the current period while the second one is total comprehensive income meaning is inama naman yung adult comprehensive income meaning that those are income and expenses for whatever period will it be realized so kinakailangan makita sya kinakailangan makita sya itong may disclosure itong nga pala ang dalawang ito ay disclosure kung sakaling Merong non-controlling interest. By the way, ano ba itong non-controlling interest? Atiyadong binabanggit na pay rent. Yan yung scenario kung sakaling a group of companies tayo. And then we are the pay rent. Meaning we are the pay rent, we are the acquirer of the business. We are the acquirer of those subsidiaries. Pero halimbawa yung entity yung binili mo, yung binili mo, hindi naman 100% yung pagkakabili mo. But rather, let's say 90% lang. So pag gumawa tayo ng consolidated financial statements or consolidated income statement, yung income natin, di ba, hindi naman lahat sa atin. Okay? Kasi nga, part nun hindi atin, dahil 90% lang halimbawa yung binili natin kay subsidiary. So yung share na hindi atin, yung para na nga kay non-controlling interest, kina kailangan makita, okay, disclosure dun sa face ng financial statement. Nasa iba ba? Makano yung kay parent? How much is the non-controlling interest? I know that this discussion is still a bit long because we really need a sample problem to see how this is really done. As a last but not least, I just want to mention that comprehensive income statement is used as an accrual principle. Meaning, where I look at income and expenses when they accord not when the cash is collected or paid. That's what the actual principle says. The income and expenses, you can't just recognize for the current period, but rather they will be treated as other comprehensive income if what the standard of the BFR is that they should be considered as other comprehensive income. Okay, we've talked a lot. Let's go back to the comprehensive income statement. I hope you learned something. If so, you can like this video like cure. But if you want to learn more, About the financial statements, here are some of the video lectures you can watch. That's all and thank you very much.

Financial performance is also known as results of operation. So kung gusto mong makita ang resulta ng operasyon ng negosyo, ang kanyang kinita, profit or loss, o yun ang nga financial performance in a given period, ang titignan mo na report, ang financial statements, ay itong income statement na nga. So balit ngayon, hindi na yun yung tawag sa kanya, pinalawak na comprehensive income statement. Namamaya, mas liliwanagin natin kung bakit. Sa ngayon, lagyan din muna natin ang definition, ano ba itong tinatawag na comprehensive income.

Ang mangit dito, it is the change in equity during a period resulting from transactions and other events other than changes resulting from transactions with owners in their capacity as owners. So meaning, ito yung paggalaw, yung maaaring pagtaas or pagbaba ng equity ng kapital sa isang panahon na dahil sa mga transaksyon at iba pang mga aganapan. na hindi ang dahilan ay ang mga may-ari. Kung mapapansin ninyo yung definition, hindi directly sinabi kung ano siya, but rather binanggit kung alin yung hindi.

Again, ang sabi, ang comprehensive income ay mga pagalaw sa equity na hindi dahil sa may-ari, meaning hindi dito kasama yung investment ng owner, yung kanyang withdrawal, or kung sakali namang corporation, yung issuance of shares. or the payment of dividends but not because of the owners the reason why the equity has increased so if we will explain it more this is the comprehensive income if we will put the income not the other side there are two that can be included and those are profit or loss and this other comprehensive income let's just give a definition first profit or loss is the total income less expenses We just know that, right? The revenue, the earnings, you will reduce the expenses.

That is what is called profit or loss. Excluding components of other comprehensive income. Because we are two, right?

One is profit or loss, and the other is other comprehensive income. This is the other part of comprehensive income. What is this one?

It comprises of items of income and expense. So meaning pala, itong profit or loss and other comprehensive income, are both income and expense. Okay? Ulitin ko. Other comprehensive income comprises items of income and expense including reclassification adjustments that are not recognized in profit or loss as required or permitted by PFRS.

So again, pareha sila na income and expense. Ang pagkakaiba lang itong other comprehensive income ay income and expense na hindi nakakasama profit or loss because that's what the standard says. So what is this?

This other comprehensive income. We can also have a video lecture on that. So if you want to see the depth, just go back there. At that point, it's an income and expense that happened today in this period.

But its effect is not now but rather, it's still long. Therefore, even if it's an income and expense, Hindi siya na-classify or na-considered as profit or loss. Kasi itong profit or loss na to, ito yung income and expense na nare-recognize in this current period. Okay?

Again and again, basta po pag sinabi natin comprehensive income, sila'y revenue and expenses. Ang pagkakaiba ng mong dalawang component, profit or loss, yung income and expense na nangyari this period and will be recognized this period. Yung normal na alam na natin. While ito namang other comprehensive income are income and expense that happened in this period but will not be recognized in this period but rather matagal pa. Yun lang yung mababaw na paliwanan dito sa OCI na ito.

Pero yung kanyang lalim nandun po sa ating discussion sapagkat medyo kakaiba nga itong terminology na ito. Anyways, nalagyan na po natin ang definition kung ano itong comprehensive income. Now let's see how the Comprehensive Income Statement of the United States is done. What it says in its press release...

presentation, merong dalawang paraan. The first one is what we call two-statement approach. Well, in una, gagawa ka ng income statement showing components of profit or loss.

In pangalawa, idudugsung mo kasi nga two-statement approach is statement of comprehensive income. It starts with profit or loss as shown in the income statement plus or minus the components of other comprehensive income. So meaning, in this statement of comprehensive income, that you will do the second one, that's where you will see the other comprehensive income.

And if we will put a few illustrations, here is its example, letter A. Two-step, two-statement approach. So the first statement above, we will notice, let's say the name of the company is ABC Company, income statement, the name of the statement, the previous one that was done, in the past few years. income statement and then for the year end of december 31 2024 para makita yung is yung period na ginagawa natin ng statement and then nakikita na nga doon yung mga revenues and expenses mga maya kuwabasahin po yan as we discuss components sources of income components of expense and the line items okay pero ang punto lang natin nakikita nga dyan yung income and expenses hanggang sa bumagsak o ang maging dulo is yung income after tax This is the...

profit or loss na tinatawag income and expenses that are recognized in this current period so meaning pag tinanong ka makano yung totoong kinita ngayong 2024 makikita po natin sa income statement yung income after tax na nga okay ngayon dahil two statement approach yan after mong gawin ito gagawa ka pa ng isa yun namang statement na tinatawag na statement of comprehensive income So, like earlier, name of the company. The statement of comprehensive income and then for the year end of December 31, 2024, same period. Now, what he started, what he also mentioned in our reading is the income after tax. The income that you reported coming from the income statement. And then, he is adding the income and expenses that are not recognized in the current period.

That is what we call other comprehensive income. Yeah or it will be deducted depending on what is there to get the so-called total comprehensive income so you will combine the two because we mentioned earlier that comprehensive income has two components so in this statement two statement approach income statement and the statement of comprehensive income let's move on it is not possible for the company to do that but rather a different approach This is what we call a single statement. approach.

Ang bangkit dito, this is the combined statement showing the components of profit or loss and components of OCI or other comprehensive income in a single statement of comprehensive income. Ano ang sabi? Hindi mo na kinakailangang paghiwalayin sa dalawang magkaibang statement, yung profit or loss at yung other comprehensive income, but rather pagsasamahin mo na.

At ang What you call them is a statement of comprensibility. income. You will notice the name, right? Because in the statement of comprehensive income earlier, even though the presentation is short because you just took the neto from the income statement, it is still a comprehensive income because there is profit or loss and there is also the OCI. There are no details in profit or loss because we only put the neto amount.

But rather, they do not mention. Single statement approach, all of the components that you will notice are from the income statement to the net sales to the income after tax. You have shown all of those details. Because earlier, it was net only. And after that, just like earlier, you can add or decrease the other comprehensive income.

You can add or decrease it depending on the effect. And then, to count the total comprehensive income, So what did we notice? Instead of separating, we will just do one statement of comprehensive income. So again, currently, what is required in the general purpose financial statement is either of the two. What you can do is separate the two statements.

So that you can see that the OCI is separated in the current period. Or if you want to include it because you can see here the effect for the current period. And the effect as a whole, which is included in future periods of income and expenses, bottom up when Let's start with the total comprehensive income. Again, that is how we present a comprehensive income statement. By the way, we will also have pen and paper video discussion about how to do it.

The sample... problems sources of income company okay we have four here the first one is sales of merchandise to customers and the most basic if you are a merchandising business or let's say manufacturing and you sell your products that is the sale of merchandise net sales that is in our presentation and then we have here rendering of services you might be a service business so therefore you are not selling merchandise but rather what we perform is services That's what we render. as income din yan. So maaaring po natin ilagay dun sa tax yung revenue naman ang normal na ginagamit na term dun revenue okay hindi sales. And then we have here use of entities resources.

When we say resources hindi e malamang asset yan. So yung ibang assets natin pinakita rin natin. So halimbawa meron kang ginawang paupahan so you will have an income. Yung extra ng cash mo ininvest mo therefore nagkaroon ka ng interest income or investment income or royalty income, and other types of income that are not... for selling of merchandise or rendering of your services but rather it is through the use of your resources and then number four is disposal and this person disposal If you bought PPI at P100 and sold it at P150, you will earn.

It is considered as disposal of resources other than product. Because you are not selling your equipment, your investment. Those are the gains. These four, they are the ones who can be seen in the presentation above. That's why we noticed that we have here the net sales, you know that is selling product, and we have here other income at the bottom.

So this other income can go in there. the use of entities resources and the disposal of resources other than that okay so that is the sources of revenue of income of business entities and then we have here component of expense income statement we have the revenue of income of resources while the outflow what the out are considered as expenses I mean you my guest was not in right in the indic cash and over the gas does not mean okay so we have here five the first one is cost of goods or cost of sales simply the man you product of a big minute am I pulling any of products considered as cost of goods or not it all right and then but in a minus young the law and Loma lavas a young gross income meaning you've got to move you to move the second event and I'm productive okay and then we have here distribution costs or selling expense administrative expense by the way That's why these two are considered as operating expense. Meaning, they are not part of the product but they need to run the business.

They are also necessary. One is about selling the product. For example, advertising. You need to promote your product to be sold.

So it's not product cost because it's not the product itself. It's just the ways to be sold. You hired an agent to sell this. The rent of your own store, right? na ginagamit po pagbebenta, they are considered as distribution or selling expense.

While ito namang administrative expenses, sila yung tipong ginagamit sa pagnenegosyo. Okay? Na hindi rin tungkol sa kudokto at hindi rin sa pagbebenta. Basta kailangan siya para sa management ng business itself.

Halimbawa, kailangan mo nga ng accountant tayo na magkikwenta ng income ng NBT. So, malamang bahagi yun na tinatawag na administrative expenses. At marami pang iba na I believe marami na kayong ID. idea of what that is.

And then we have here, again, again, these two are considered as part of operating expense. The next one is other expenses. That is if it is not A, B, C, and E. So, the so-called other. In the first time, it was called extraordinary items.

But now, it's not like that. Usually, your losses are already there. So, for example, you have PPE like earlier. Earlier, you sold and earned.

Therefore, there is a source of but instead, you sold your PPE. Let's say machine, okay, at nalugi ka. So that can be considered as other expenses kasi hindi naman siya kasama sa operasyon, diba?

So other expenses yun. The next one is income tax expense. Yan naman syempre yung share ng government kapag kakumina tayo.

taxes that we require to pay, which is probably separate from his presentation. If we notice here, in what we are showing, we have here now the gross income, we add the other income, if you have other sources. It's good to highlight above the income statement the main source of your operation Then add other income to get this total income And then we deduct the expenses This is what we mentioned earlier We have the selling, the admin, then the other expenses The finance cost is not only mentioned in the component expenses In the sources I collected But still, it's mentioned in the line items that we'll talk about later The finance cost is required to be shown way of finance goes is you our expenses in borrowing money or sources of our financing to be able to have resources to cash the entity so normally it includes the bank charges such as interest expense and then if we continue we will determine the income before tax we have to deduct this another one income tax expense to get our income after tax So again, this is the source of income.

and component of expenses okay now I'm on the I for the current period my earning income at expenses pero in the other period my son were there okay marindita so you still bend it is resources or other expenses so Bali okay so by the time he did a month for the current period of effect me a and I would know how to handle I other comprehensive income okay so the only but I know So, how or what is the... of income statement. Is it always like this, like what we've seen earlier? Actually, it's not. There are two ways on how to do it, or the forms of income statement.

The first one is functional presentation, how you present. You classify expenses based on their function. So actually, the name of the presentation, that's also the definition, based on function. What is this function of expense?

This is what I've been talking about if it's related to product, sa pagbabenta, sa administration, or sa financing whatsoever. Yun yung tinatawag na functional presentation. Majority of the income statements presented are based on functional presentation. Okay? Pero wala din namang masama kung ito ang gusto mong gawing presentation.

Itong tinatawag na natural presentation. Expenses are aggregated based on nature. So, nandun din yung meaning dun sa mismong pangalan.

Natural. kung ano ba talaga yung nature of expense hindi ba yung function. Ang ibig sabihin halimbawa ganito, salary expense, hindi ba yan ay nag-a-arise or nagkakaroon sapagkat meron isang tao na sumweldo. Under functional presentation, aalamin ba saan ba or ano ang na-contribute nung salary expense ay nung tao dun sa entity.

Kung halimbawa yung tao na yun ay part ng direct labor, so meaning kailangan siya sa pag-produce. or pagawa ng produkto, yung salaries niya will be part of cost of goods sold. Kung sakaling yung salaries na yun, the accountant yung gumawa ng income statement, so sa admin yun, so therefore that will be part of administrative expenses.

Kung yun naman yung salary ng ahente na nagbenta ng produkto, therefore that will be part of distribution expense. So what I am trying to say is, even though A is ay yung account title, salaries expense, hinihiwa-hiwalay mo siya based on function. You ain't cool presentation is your functional presentation so valid consigning natural presentation in the monarchy not allowing he why he will he you salaries expensive to an Abbas a bus at the present Russia as one line item salaries expense the only disadvantage here I mean you other way the Nia is in the moon I'm a lot of money compared to an busier see you will not know if it is admin, selling or not all your salary expenses will be deducted for those who are still not sure, here is the presentation the natural presentation the revenues are on the top we have here net sales and other income the cost of goods sold will not be deducted because you are not classifying the expenses by function therefore, all of the above are income to get this what we call total income and then below it You will show all your expenses. Let's say this is the net purchases.

All the purchases are there. And that's the salary expense irrespective of the department or function. Depreciation is the same. It used to be divided.

happy dinat in shock was a little asset that way para selling selling you and admin admin you depreciation pero is a compound I tell the land the procedure the land where I'm a couple be like one of the pinnacle just to emphasize the point natural presentation and then we will determine the income before tax then less income tax expense to get this income after tax. If you have added comprehensive income, you will probably add more. But our presentation, if it's a natural presentation, it's a simple example. We will just show you the problem solving later on.

Now, this is the highlight of our discussion. And here are the what are the line items in statement of comprehensive income. Ibig sabihin po ay, ano ba talaga dapat yung mga makikita natin dito sa income statement natin or comprehensive income.

First, we have here revenue. So, natural, kinakipakita mo kung magkano kinita. Yung revenue, I mean.

O yung benta. And then we have here, gain or loss from the recognition of financial asset measured at amortized cost. Ito muna yung point natin, diba?

Pag sinabing siya ay part ng line item, If you're not pregnant... you can see it here in the statement that when you give it to the negotiator he will read these because for example you have a lot of sources of revenue you have rent you have interest you have let's say royalties it can be in the face of financial statements he will not see it in detail but rather he will see it in the note because what they are showing here revenue or the total other income. We will just look at the notes to see which one is the detail. What is mentioned here is the line item in the statement of comprehensive income they are the ones that we should see ourselves in the financial statements. And that is the gain or loss from the recognition of financial asset measured and amortized.

Let's simplify it first. Sometimes you have Investment in bonds. That's the financial...

asset measured and amortized costs normally in the entire machine with mature I'm far and I'm pagita my interest pero pano pong sahalit na maintay mo shang mag mature even and ammo the recognize mo a dialed on my arm again or loss you know result na yun a kinakailangang ipakita mo separately some face non finish up non non income statement okay you love what a major have a non concept Basahang punto, dapat makikita sila. Explain ko lang kung anong ibig sabihin ng line. Okay?

Pero hindi na po natin sobrang babalikan na dapat makita siya. Ngayon na lang ulit. Okay, number three, we have finance costs.

Yun ang mga expenses for the sources of financing natin, such as bank charges and interest. Share of income or loss of associate and joint venture accounted for using equity method. So, di ba kapag ka associate and joint venture, Let's say for example, you have an association, even without a declaration of dividends, you get the percentage share of its profit. That is the equity method.

So meaning, this investment income from this scenario, okay, you need to see it separately from the income statement. Then income tax expense. Six would be gain or loss on reclassification of financial statement from amortized cost of fair value through profit or loss. Pero din may gain or loss.

Pero hindi nasa... recognition of investment in bonds or financial asset at amortized cost but rather it is gain or loss from reclassification reclassification meaning may pinanggalingan mula sa amortized cost lumipat through profit or loss yung daw changes dun yung paglipat na yun yung reclassification i mean yung gain or loss kinakailangan makita separately then gain or loss on reclassification of financial asset from fair value through OCI to fair value through profit or loss. So, just like earlier, there is a reclassification.

This time, it came from FBOCI. This is probably the debt securities OCI. Because if it's FBOCI, equity securities, it cannot be reclassified. This is FBOCI debt securities. And it has already been transferred to FBPN or Fair Value True Profit or Loss.

Its gain or loss, again, should be seen separately in the income statement. And then we have here a single amount of price. discontinued operation This is a different case.

For example, the entity has many divisions or branches. And then one of its divisions, it thought to discontinue it. It could be mixed, but much better if the presentation is separated so that the income statement will not be misread.

For example, Where is your division? For simplicity, each division has 1 million sales. So if you make net sales, you can show that the net sales is not 10 million but rather 9 million. Because your FS will be confused and think that 10 million will be sold today so next year it might be 10 million again.

That's why he'll be confused. Why? How if you stop one? So, he expects that next year, if you present 10 million, maybe 10 million too.

Because of one thing, you will stop having discontinued operation. Therefore, much better, you will only show 9 million net sales. And the net result of the operation of a division that will be discontinued, will be shown to a line item.

So, what will happen here, we have income before tax. So, you can call it income from continuing operation. And then meron kang isisingit na isa pa, income or loss from discontinued operation. Separate siya.

By the way, sa discussion ng discontinued operation na topic, dun mahahighlight yung presentation na sinasabi natin sa income statement ngayon. Basta yung punto lang po natin. Again, kung sakaling meron kang discontinued operation, magpapakita ka ng single amount. Ibig sabihin, lahat ng result niya, yung income and expenses, neto na. You will not see the details, it's just the schedule.

It's just a line and the result of income or expense is a discontinued operation. By the way, it's not because discontinued operation is always loss. It can also be income, they just thought of discontinue. Okay?

And then we have here profit or loss for the period. You can see it at the end. And then we have here other comprehensive income.

You can see it here. Other comprehensive income has many examples. We can see that.

is in the schedule, its composition. It's in the notes. But in the financial statement phase, of course, the total of the other is comprehensive income. And then, at the very end, you can also see the comprehensive income for the period. That's the bottom line.

Total comprehensive income. So, that 11 is what you can see in the phase of comprehensive income statement. Okay?

That's not the type of... That's all you need to know. That's what the Pass 1 presentation says.

You can add more entities if you think it's important to read the face of the income statement. By the way, there is also a required disclosure on the face of the income statement. The disclosure is the added story.

Most of the disclosures are seen in notes or financial statements. But there are disclosures. even if it's in the income statement, in its face, it's right below it.

You can see it in the same report. What are the two? First is profit or loss attributable to non-controlling interests and owners of the parent. And then the second one is total comprehensive income attributable to non-controlling interests and owners of the parent. So it's like both, right?

What it says in letter A is that it's probably profit or loss. that is the result of operation for the current period while the second one is total comprehensive income meaning is inama naman yung adult comprehensive income meaning that those are income and expenses for whatever period will it be realized so kinakailangan makita sya kinakailangan makita sya itong may disclosure itong nga pala ang dalawang ito ay disclosure kung sakaling Merong non-controlling interest. By the way, ano ba itong non-controlling interest?

Atiyadong binabanggit na pay rent. Yan yung scenario kung sakaling a group of companies tayo. And then we are the pay rent.

Meaning we are the pay rent, we are the acquirer of the business. We are the acquirer of those subsidiaries. Pero halimbawa yung entity yung binili mo, yung binili mo, hindi naman 100% yung pagkakabili mo. But rather, let's say 90% lang. So pag gumawa tayo ng consolidated financial statements or consolidated income statement, yung income natin, di ba, hindi naman lahat sa atin.

Okay? Kasi nga, part nun hindi atin, dahil 90% lang halimbawa yung binili natin kay subsidiary. So yung share na hindi atin, yung para na nga kay non-controlling interest, kina kailangan makita, okay, disclosure dun sa face ng financial statement. Nasa iba ba? Makano yung kay parent?

How much is the non-controlling interest? I know that this discussion is still a bit long because we really need a sample problem to see how this is really done. As a last but not least, I just want to mention that comprehensive income statement is used as an accrual principle. Meaning, where I look at income and expenses when they accord not when the cash is collected or paid. That's what the actual principle says.

The income and expenses, you can't just recognize for the current period, but rather they will be treated as other comprehensive income if what the standard of the BFR is that they should be considered as other comprehensive income. Okay, we've talked a lot. Let's go back to the comprehensive income statement.

I hope you learned something. If so, you can like this video like cure. But if you want to learn more, About the financial statements, here are some of the video lectures you can watch.

That's all and thank you very much.

Transcript for:Comprehensive Income Overview

Transcript for:
Comprehensive Income Overview