What are the two acceptable formats for reporting comprehensive income?

The two acceptable formats for reporting comprehensive income are indeed the single-statement and two-statement approaches. The single-statement approach incorporates comprehensive income in a single financial statement. It includes both net income and other comprehensive income (OCI) within one continuous report. This format allows users to see the total comprehensive income in one consolidated place, which may enhance readability and clarity.

The two-statement approach, on the other hand, involves the presentation of net income in one statement and the other comprehensive income in a separate statement. This method helps to distinctly separate the components of net income from other comprehensive income, which could be beneficial for users who need to analyze these segments separately for decision-making purposes.

Both approaches comply with the generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), allowing companies the flexibility to choose the format that best fits their reporting needs and the preferences of their financial statement users. This dual acceptance is rooted in the importance placed on the comprehensive income concept, which represents changes in equity from transactions and events from non-owner sources.